Process and Areas of Marketing Research

Process of Marketing Research

There are four stages on marketing research. They are (1) Defining problems and setting the research objectives, (2) developing the research plan, (3) implementing the research plan and (4) interpreting and reporting the findings.
Marketing Research Process

1. Defining problem and setting research objectives

In the first stage of marketing research process, it is to define problem and set the research objectives. Marketing manager and marketing researcher should work together remaining in close contact to define problems carefully and to be in agreement with each other on the research objectives. Defining problem is to identify research area. This should be according to all resources like: financial, physical, and manpower. Literature review, case study, experience survey and brain storming can be used as basis to identify problem and define it. If the definition of the problem becomes wrong, collection of information, its analysis, conclusion and report also become wrong. The task of defining problem becomes complicated. While defining problem, problem and its nature should be clearly identified.

After the problem has been defined, the research objectives should be set. The research objectives should not be broad. After the objectives have been set, what types of information need to be collected becomes clear. Research model also can be determined by research objectives.

The statement of problem and research objectives guides the entire research process. So, both marketing manager and marketing researcher should agree to it for which they should work together.

2. Developing the research plan

After clearly defining problem and setting objectives, research plan should be developed. At this stage, plan is developed for collecting information. Sources of information, research method, research equipment, model plan, contact method, analyzing tool etc. are determined while developing research plan.

Information can be collected from two sources, primary and secondary, for researches. The matter, whether primary or secondary or both sources are necessary, depends on the problems and objective of the research. The first collected information data for special purpose are primary information whereas already published and used information are secondary information. Survey, observation, experiment etc. are the sources of primary information. Libraries, government, professional and business organizations, private business firms, advertisement media, university researches organization, Internet etc. are sources of secondary information.

Survey methods, observation method, consumer group method etc. are the major marketing research methods whereas questioners and mechanical devices are the major tools/equipment of research. Model units, models size and model methods are also included in model plan. The contact method of marketing research includes mail, personal interview, telephone, email, fax etc. Analytical tools included average, regression, correlation, variance etc.

3. Implementing the research plan

Implementation of research plan is the third stage of marketing research. After the developing research plan, it is implemented or data are collected and is analyzed. Field study is done for collection of primary data. Qualified and skilled person is asked to collect data. Questionnaires are given to fill up, interview is taken and they are recorded.

Data analysis includes the task of coding, tabulation and statistical analysis of data. Proper statistical methods are used for data analysis. Computer helps much in data analysis.

4. Interpreting and reporting the findings

The task of interpreting the findings and reporting is the last stage of research process. The researcher should explain the findings and submit to the management. Researcher may be experienced in research and make out findings, but a marketing manager knows more about the problems and how decisions should be taken. So, the research findings should be interpreted by the researcher and the marketing manager together. Interpretation of findings is the important stage of marketing research process. If the manager accepts wrong interpretation, even the best research becomes worthless. So, both the researcher and the marketing manager should interpret the findings together and take responsibility of research process and decision. The report of research may be oral or written or both in form depending on the nature of research.

Areas of Marketing Research

Market, products, price, promotion and distribution are included in marketing research areas. The selling and buying process or place of goods or service is called market. The goods, ideas or services having the power of meeting human needs are called goods. Goods are the bases of marketing. Goods or services are measured with money for selling in market. This is called price. Sale or purchase of goods or services cannot be without price. The tasks advertising, publicity, personal selling, sale exhibition etc. for supplying goods to target market is called promotion. Promotion of goods gives positive impression to the customers. The mechanism to supply goods to the ultimate consumers is called distribution. This includes physical distribution and marketing channels.

1. Market research

The place or process of buying and selling goods is called market. Market consists of goods, sellers and buyers. Sellers and buyers may deal directly or indirectly. Market research includes market segmentation research, buyers’ trend and behavior research, forecasting of demand research, dealers’ trend and behavior research, competition research, firm’s condition, market trend research etc.

2. Product research

The things or materials which can meet the needs of humans are called products. Products may be with or without physical shape. Product research should be done for making any product marketable. The product research includes quality research, feature research, style-color-size-shape-beauty research, brand and mark research, packaging research, product-line research, warranty research, post-sale research, development of new product research, product positioning research, product life cycle research etc.

3. Price research

The monetary value of any product is called price. It makes easy for buying and selling of products. Price should be equivalent to utility of the product. There should not be fixed high price for lower quality product. The price of product is affected by its production cost. If production cost is high, price becomes high and if production cost is low, price also becomes low. Price of any product directly affects demands. Price research includes price level research, pricing method research, price policy research, discount research, payment related research etc.

4. Promotion research

The activity in all done to supply goods and services to target market is called promotion. Today’s age is the age of promotion. If the promotion is not effective, even the best quality goods cannot be sold out. Products can be promoted through advertisement, sale promotion, publicity, public contact, personal selling etc. So, all these things to be done are included promotion research. Besides, media research, advertisement effectiveness research, channel promotion research, etc. are also included in promotion research.

5. Distribution research

The task of supplying goods and services to the consumption center from the production center is called distribution. Intermediaries, warehouse and transport have an important role in distribution. The task of distribution should be effective. Channel research, warehousing research, transport research, distribution cost research, distribution area research, inventory level and location research, order processing research etc. are included in distribution research.

Market research

  • Market segmentation
  • Buyer's behavior and attitudes
  • Forecasting of demand
  • Dealer's behavior and attitudes
  • Competition
  • Forecasting of business conditions and market trends

Product research

  • Quality
  • Features
  • Style, color, size, shape, beauty
  • Brand name and brand mark
  • Packaging
  • Product line
  • Warranty
  • Service after sales
  • New product development
  • Life cycle of product
  • Product positioning

Price research

  • Price level
  • Pricing methods
  • Pricing policies
  • Discount
  • Payment

Promotion research

  • Advertising
  • Publicity
  • Personal selling
  • Sales promotion
  • Public relation
  • Advertising effectiveness
  • Media

Distribution research

  • Channel
  • Distribution area
  • Inventory level and location
  • Transportation
  • Warehousing
  • Order processing
  • Distribution costs

Marketing Information System in Nepal and Its Uses in Marketing Decisions

The age of today is the age of information technology. Nepal has also moved forward in the development of information technology. The development of telephone, mobile, fax, internet etc. has made marketing research easy and simple. Although some marketing managers in Nepal take decisions at notion, experience and hunch, all managers do not do so. While taking decision, they are found using marketing information system.

After the adoption of privatization policy in Nepal, seller's market has changed into buyer's market. Economic globalization is increasing. Internal competition is changing into global competition. Marketing environment is getting more complicated. In this context, marketing managers in Nepal also are gradually changing their traditional decision making style into modern style and started using marketing information system in taking marketing decisions.

1. Marketing research system

Products, price, distribution, promotion, customers, sales, and competition are researched in marketing research. In Nepal, more emphasis is found to have given to promotion, sales and competition than to price, distribution and customers.

2. Marketing intelligence system

The mechanism of collecting marketing information everyday is called marketing intelligence system. In Nepal, information is collected from both formal and informal sources. Sellers, intermediaries, marketing information center, specialists, private agencies etc. are the formal sources of information. Customers, managers and other concerned persons are informal sources. More emphasis is found to have given to intermediaries and customers in Nepal.

3. Internal record system

The record kept in order to manage the activities in an organization orderly is called internal record. Internal records are related to customers and sales. Account record, special report and annual report, audit report are also internal records. Internal records should be compulsorily kept in Nepal. Even if some organizations do not update such records, they keep internal record. Both marketing manager and researchers use internal records in taking marketing related decisions.

4. Marketing decision support system

Marketing decision support system is another component of marketing information system in Nepal. It is not widely used in Nepal. Some multinational companies and joint venture banks use marketing decision support system to interpret data. Ratios, graphs, statistical techniques and mathematical models are also used in Nepal.

Components of Marketing Information System

Market research, marketing intelligence, internal records and information analysis are the important components of marketing information system.

1. Marketing research system

The orderly research conducted to solve special market related problems is called marketing research system. While carrying out marketing researches, goods or services, price, place, promotion, customers, sale competition etc. are deeply studied and carefully analyzed using different research methods and tools. The main purpose of marketing research is to provide reliable and sufficient information needed for taking marketing related decisions. In marketing research, at first problems should be defined. Then gradually, objective of the research should be prepared, research plan be developed, necessary information be collected and analyzed and conclusion be drawn. The major sectors of marketing research are as follows:

a) Product research: Product research is one of the important areas of marketing research. While researching a product, a detailed study and analysis is done on development of new product, product life cycle, brand loyalty, product positioning, product experiment, packaging, design etc.

b) Price research: Price research is also another important research area of marketing research. While researching price, detailed study and analysis is done on the method of pricing, trend of pricing, cost structure, price of competitors’ products and their pricing policy.

c) Place research: The other important area of marketing research is place research. While researching a place, a detailed study and analysis is done on warehouse, transport, distribution channel, channel structure, delivery cost etc.

d) Promotion research: Promotion research is also one of the important areas of marketing research. While researching a promotion, a detailed study and analysis is done on the effectiveness of advertisement, media of advertisement, effect of promotion etc.

e) Consumer research: Research should also be done on consumers in marketing research. A detailed study and analysis should be done on the type and nature of consumers, motivating factors, consumers’ need and wants, consumers satisfaction etc.

f) Sales research: The other important area of marketing research is sales research. While researching sales, a detail study and analysis is done on sales turn-over, market share, sale performance, future market, sale forecasting etc.

g) Competition research: Research should also be done on competitors while carrying out marketing research. Degree of competition and their strategy should be studied in detail and analyzed.

2. Marketing intelligence system

The mechanism of collecting information related to marketing environment each day is called marketing intelligence. It informs about daily changes in the marketing environment. This helps business organization to identify their weak and strong aspects of competitors and analyze them. As a result, the business organization becomes able to make necessary plans and strategies to get success in competitive market.

Market intelligence is also called environmental scanning. It scan internal and external environmental factors affecting business organization and helps make proper business strategy to insure organizational success.

There are two sources of marketing intelligence. They are (a) formal source and (b) informal source. Sales men, intermediaries, information centers, experts, private agencies etc. are formal sources and newspapers, trade journals, magazines, employees etc. are informal sources.

a) Formal sources: The formal sources of marketing intelligence are as follows:

  • Salesmen: Salesmen perform their works living in their respective fields. So, they directly know about the changes taken place in market. A business organization should collect all information of such changes from salesmen and analyze them. The organization should make the salesmen skilled for this purpose and motivate them for good performance.
  • Intermediaries: The intermediaries include dealers, distributors, wholesalers, retailers etc. They remain acting as intermediaries of different products in the markets. They know everything about market. So, a business organization should motivate them to get important information.
  • Marketing information center: An information center can be established under marketing information system. In this system, a business organization secretly keeps its employees in competitors’ organizations as secret agents to collect information. Such secret agents send all necessary information about their policy, program, strategies etc.
  • Specialist/expert: A business organization may also appoint specialists for collecting market information. Such specialists become skilled in scanning market environment.
  • Private agency: A business organization may buy market information from private agencies. Such private agencies become efficient in collecting market information and analyze them.

b) Informal sources: The informal sources of marketing intelligence are as follows:

  • Reading newspapers, magazines, trade journals etc.
  • Having interactions with production manager, financial manager, personnel manager, research and development manager, sales manager, employees etc.
  • Having interaction with customers, intermediaries, other concerned persons etc.

3. Internal record system

The records kept as systematic arrangement of different activities done within a business organization is called internal record system. Internal record is an easily available source of important records are included in internal record.

a) Customer related record: The information about customers’ demand, their profile etc. is provided by customer related records. Order letters, bills, invoices, stock record, shipment paper etc. are included in this.

b) Sales related records: Sales record provides information related to customers’ behavior, their expectation, sales quantity, sales trend, market segmentation etc. Such information can be found from sales record.

c) Other records: A business organization also keeps other records besides sales related records and customers related records. They are: special report, annual report, audit report, financial report etc. Such reports also provide useful information.

4. Marketing decision support system (MDDS)

Marketing decision support system is also known as decision support system- DSS. It is a co-ordinated collection of data, system, tools and techniques with supporting software and hardware by which an organization gathers and interprets relevant information form business and environment and turns it into a basis for marketing action. Marketing decision support system adds speed and flexibility to the marketing information system. According to William J. Stanton, DSS is a procedure that allows a manager to interact with data and methods of analysis to gather, analyze and interpret information. MDSS has the methods for analyzing data. These methods range from simple procedure such as computing ratio or graphs to sophisticated statistical techniques and mathematical models. The following figure depicts the relationship in a decision support system:
Structure of a decision support system
The components of marketing decision support system are as follows:

a) Data bank: A business firm collects different information from different sources. The store where such information is kept is called data bank. Every necessary kind of information can be found in such data bank.

b) Method bank: Different kinds of statistical tools are needed to analyze collected information. For example: average percent, classification, tabulation, regression, co-relation, survey, diagram, cluster analysis, factor analysis etc. The store to keep such different methods is called method bank.

c) Model bank: Decisions need to be taken on different heads in marketing. Decision should be rational and effective. Different kinds of quantitative models should be used to bring simplicity and effectiveness in decision-making process. These models define interrelationship among different elements. These models include sale response, model, new product pretest model etc.

Marketing Information System - Meaning and Features

Marketing information system is the mechanism which provides all the necessary information and data to the decision maker on all marketing related issues. It gives regular flow of information about goods or services, price, advertisement, sale, competition etc. The important technology to scan and monitor
external environmental components is marketing information system. So, it is also called the life-blood of marketing. It collects important information from different sources, analyzes them and distributes to the decision maker.

This is the age of information revolution. Marketing managers need regular information to find out changing wants and needs to customers. Besides this, information is also necessary to know strong and weak aspects of competitors and make distribution channel effective. In fact, whatever a manager does is done only with the help of information. He/she cannot take decision on any issue without information. So, marketing information system should be developed in business organization for taking rational and effective decisions.

Facts, estimates, opinions etc. are included in marketing information. As important and great decisions are taken on the basis of the information, it (information) should be complete, accurate and updated. Generally, a business organization wants to get information about (a) expectation of customers about the specialty of goods (size, color, design, type, quality etc.), (b) quantity of demand at a time, (c) price of the goods wanted by the customers, (d) distribution channel chosen by customers (e) buying motives of customers (f) dealers’ behavior (g) degree of competition (h) government policy affecting market etc. from the marketing information system.

Marketing information system is a regular process. It never ends. It is very important for a marketing manager. He/she makes plans, programs, policies, strategies etc. with its help. Structured, human activities, machines, technology etc. are included in marketing information system. They are orderly used for taking marketing decisions. Different scholars and experts of marketing have defined it differently; among them some important ones have been given as follows:

According to prof. Philip Kotler, “A marketing information system consists of people, equipment and procedures together, sort, analyze, evaluate, and distribute needed, timely and accurate information to marketing decision maker.”
According to Prof. William J. Stanton, “Marketing information system is an ongoing, organized procedure to generate, analyze, disseminate, store and retrieve information for use in making marketing decisions.”
 According to Busch and Houston, “A marketing information system consists of structured, interacting complex of persons, machines and procedures designed to generate and orderly flow of information sources for use and input to marketing decision making.”
In conclusion, marketing information system is an ongoing organizational process which includes the activities such as collection of information, sorting, analysis, evaluation, selection, distribution, acquiring etc. Men, equipment, procedures are orderly used for taking marketing decisions in it. Marketing information system should be able to give regular report, up-to-date information and find the trend.

Features of Marketing Information System

The main features of marketing information system are continuous process, accuracy, reliability and completeness, constancy and accessibility, interrelated components, right time etc. They are made clearer by the following figure:
Features of Marketing Information System

1. Continuous process

The important function of marketing information system is to collect necessary information, select, analyze, review and evaluate them for taking proper decision and controlling. This function goes on regularly. So, marketing information system is a continuous process.

2. Accuracy, reliability and completeness

Marketing information system provides accurate, reliable and complete information for taking rational and quick decision. Such types of information become compulsory in a competitive environment.

3. Constancy and accessibility

The bases of information provided by marketing information system become same. So, information becomes constant and uniform. Similarly, information can be easily obtained. Due to the tremendous development in information technology, consistency and uniformity in flow of information have become possible and easily accessible.

4. Interrelated components

Marketing research, marketing intelligence, internal record and information analysis are the components of marketing information system. The components have an important role to make information complete, reliable and updated.

5. Right time

Decision should be rational and quick. If there is no quickness in decision, it becomes meaningless. This means, if a decision to be taken today is taken tomorrow, it becomes meaningless and can work. Marketing information system provides accurate information in proper time for taking quick and rational decision.

Importance of Marketing Information System

Marketing information system plays an important role in market expansion, effective marketing plan, environmental scanning and monitoring, want creation and delivery, marketing programme formulation and implementing, evaluation and control.

1. Expansion of market

Marketing information system plays an important role in market expansion besides conducting daily organizational functions. It provides necessary information to promote market from local to national, national to regional and regional to global market. In the lack of marketing information system expansion of market becomes impossible. For example, goods are to be shipped to American or European markets, it becomes necessary to get information about the wants, needs, priority of consumers of these countries and market trend, price, quality, competition etc. in the markets. Such information is possible only through marketing information system.

2. Marketing plan

Organizational success in competitive market depends on effective plans. Sufficient and reliable information about customers’ wants, needs, changing fashion, strong and weak aspects of competitors, customers’ brand loyalty, buying behavior, and buying motives etc. become necessary making effective plans. Marketing information system helps in making effective marketing plans by providing information about such things.

3. Environmental monitoring and scanning

Environmental monitoring and scanning are the important organs of marketing information system. Business organizations should monitor economic, political, legal, social, competitive, technological and other elements regularly. Changes in such environmental elements provide opportunities on the one hand and threats on the other. So, environmental elements should be scanned, opportunities be utilized and threats be faced.

4. Want creation and delivery

To get success in competitive environment, a business organization should be able to create wants of the customers and deliver goods to satisfy their wants. Market research should be conducted and analysis be made to identify customers’ wants and make them realize such wants. For this, marketing information system is needed. As this psychological aspect of marketing, wants should be created only after clearly studying the customers and goods or services should be produced accordingly.

5. Marketing program formulation and implementation

Success of a business organization depends on effective marketing plans and their implementation. Marketing information system collects information about customers’ wants, needs, product price, discount, commission, sale condition, possible demand etc. and analyzes and disseminates such information, which is indispensable for making marketing plans and implementing them. So, marketing information system is also very important to make marketing plans and implement them.

6. Evaluation and control

Regular evaluation and control of marketing program is an important task of marketing management process. What types of programs become successful, what types of programs can help to achieve organizational goal to what extent and what changes or improvement are needed in the programs etc. are the matters related to study, evaluation and control which can be done only with the help of marketing information system.

Sources of Data and Information

Sources of Data

Data can be collected from two sources that are internal and external sources. The data collected from internal sources are called primary data whereas the data collected from external sources are called secondary data. The sources of data are shown clearly by the following figure.
Sources of Data

A. Sources of Primary Data

The data collected for the first time are called primary data. The methods mostly used in collecting primary data are survey, observation and experiment. Generally, all these methods are not used in a same project, because they have both good and bad aspects. The question which method should be selected depends on the nature, time and cost. Or method should be selected according to the nature, time and cost.
  1. Survey: Collecting data through interviews of the people is called survey method. Data can collected through the means of individuals, telephones, mails etc.
    1. Persons/individuals: Data can be collected by taking interviews from the different person/individuals. This method is more flexible than the telephone and mail interview. During the interview time, if the person being interviewed gives incomplete answer, it can be made clear asking repeatedly to complete the answer.
    2. Telephone: Survey can be done through telephone. As different personalities can be contacted through telephone anywhere from center, this medium saves cost and time. This medium is quicker than others for prompt survey.
    3. Mail: Data can be collected through mail. In this method, questionnaire is sent to potential respondents. They also send the answers back through mail. This medium is less expensive than the personal interview and becomes more useful for national survey.
  2. Observation: Collecting data by observing activities of persons is called observation method. Observation may be personal or mechanical. Complete and accurate data can be collected through observation method.
    1. Personal observation: This method is more useful to collect data about sellers’ performance and their priority given to the brand.
    2. Mechanical observation: Mechanical observation can be done in various forms. For instance, scanner can be used in retail stores for keeping purchase record. Similarly, camera can be used to keep person’s reaction in video form.
  3. Experimental method: Primary data can be collected through experimental method. Experimental works are done in lab and field for collection of primary data.
    1. Laboratory experiment: The testing or trying out in lab is called laboratory experiment. Laboratory is used to taste/examine the components of marketing strategy.
    2. Field experiment: The other method used to understand the consumers’ reaction is field experiment. This is also like a laboratory, but it is done remaining in real situation. Test marketing is a field experiment.

B. Sources of Secondary Data

The data used once are called secondary data. It becomes much easier to collect secondary data than the primary ones. Secondary data can be collected from several sources. The main sources are as follows:
  1. Library: Library is the best source for collection of secondary data. All kinds of books, all publications, research oriented deeds, researched publications, useful materials, magazines, newspapers, official publication etc. can be found in libraries. Secondary data can be easily collected from such sources. Central Library, Keshar Library, British Council, American Library etc. are the major libraries of Nepal.
  2. Government: Government publications are also the important sources for collection of secondary data. The business organizations should compulsorily submit their annual reports of income-statement, balance sheet, cash flow statement etc. to the government bodies. Such reports and statements are also the sources of secondary data. Besides, different governmental bodies update and publish government tax record, birth registration, house sale or purchase, marriage registration, registration of domestic animals, social classes, per capita income etc. So, such government publications are also the important sources for data collection.
  3. Trade, professional and business associations: Trade, professional and business associations also give information about their activities through different kinds of publications. Some business organizations have their own library. For example; American Marketing Association has its own library containing more than four thousand books. The publications of SAFTA, WTO etc. organizations may be very useful for international marketing experts.
  4. Private business firm: Private business firms collect important data. For example, R. L. Polk and Donnelley Marketing publish city and telephone directory. They cover almost the addresses, phone no. estimated income, purchasing habit etc. in them of almost every American. Such data become very useful for the marketing experts.
  5. Advertising media: Magazines, newspapers, radios and televisions prepare useful data for householders and business organizations. For example, Sales and Marketing Management Magazine publishes ‘Survey of Buying Power’ each year. This report gives information about population, retail sale, income etc.
  6. University research organization: Research Organizations are formed in big universities. Such organizations carry out local, national and international level researches and publish. Nepal’s Tribhuvan University also has research organizations such as CERID, CINAS, CEDA etc. These organizations conduct researches on different subjects. Michigan University of America conducts regular national researches on ‘Consumers Buying Intention’.

Sources of Information

Refined and cleansed data is called information. This information becomes useful. Information can be collected from several sources. The main sources are as follows:

1) Marketing research system

The orderly researches conducted in order to solve market related problems are called marketing research system. While carrying out researches on marketing, a deep study and analysis using different methods is done about goods, price, place, distribution, promotion, consumers, sale, competition etc. Such researches and studies are very important sources of information.

2) Marketing intelligence system

The mechanism of collecting information every day about marketing environment is called marketing intelligence system. It collects changes occurred daily in marketing environment and gives information. Sellers, intermediaries, marketing information center, experts or specialists, private agencies etc. are the formal sources of marketing intelligence system whereas magazines, newspapers, trade journals, talks with customers, talks with managers and employees etc. are the informal sources of marketing intelligence system.

3) Internal record system

The records kept by business organizations to systematize different internal activities are called internal records system. Internal record is an important and easily available source of information. Customer related record, sales related record, annual reports etc. are the main internal records.

4) Marketing Decision Support System (MDSS)

A decision support system is a procedures that allows a manager to interact with data and methods together, analyze, and interpret information. Data bank, method bank and model bank are the components of decision support system.

Meaning of Data and Information

Time to time market research should be conducted in order to achieve success in marketing. Data and information should be collected for this. Data and information should be collected for this. Data and information are interrelated. Updates, sufficient and accurate data are needed for effective information. Data become useful or
meaningful only after they have been changed into information. The data which are not changed into information remain only in the form of raw information. Such data can be made useful only changing them into information.

I. Data

At first data should be collected for market research. Data are the primary form of information. So, they are called as raw information. Data can be collected from two: primary and secondary sources. The data collected for the first time are primary data. Secondary data are not originated by the investigator himself/herself, but which he/she obtains from someone else records. Thus, if instead of obtaining data ourselves, we get from the records of chamber of commerce, trade union, government bodies and from other sources, the data are called secondary data. Data include figure, table, graph, word, letters, symbol, audio, visual, etc. They all can be data. Data can be also be defined as the integrated form of facts, estimate and opinion, because data can be in the form of fact, in the form of estimation and in the form of estimate.
  1. Facts: The recorded data of works done are called facts data. Such data show the actual performance. For example, sales data, production data, purchase data etc.
  2. Estimates: The data made in the form of plan or standard is called estimate data. This is prepared with estimates but it is not actual. For example, estimated sales data, estimated income statement, estimated balance sheet etc.
  3. Opinion: The data collected as a result of personal experience, knowledge, desire, trend, thought, attitude etc. is called opinion data. This type of data cannot be uniform, because the status and attitude of data collector and data provider affect the data. Opinion data can be collected through mutual talks and observation. Reliability of such data depends on the person and the collection process.
In conclusion, the primary stage or input of information is called data. This is raw information. It is useless unless it is processed. Data is the integrated form of facts, estimates and opinion. In other word, data can be found in the forms of facts, estimates and opinions. Whatever form of the data may be, they should be changed into useful form by scrutinizing, classifying, reviewing and analyzing them.

II. Information

After the data have been made useful by scrutinizing, classifying, analyzing, and reviewing, they become information. So, the processed data is called information. Information is the important raw material for marketing decision. It has an important role in market research.

Marketing decisions are not taken in vacuum. Marketing decisions should be taken being fully informed about the condition of market, competition, demand, supply etc. This needs reliable, sufficient and updated information. If the information is complete, clear, reliable, sufficient and updated and on right time, it becomes easy to take rational and quick decision. Information includes facts, estimates and opinions. Mainly, marketing experts want to get the following information in updated form:-
  • Characteristics of goods:- size, type, color, quality, design etc.
  • Quantity of demand,
  • Price of the goods expected by consumers,
  • Consumers’ priority in distribution channel,
  • Buying motives:- rational motive, emotional motive and patronage motive,
  • Dealers’ behavior, tendency and special need,
  • Degree of competition,
  • Demand, supply and price, and
  • Government policies.
Success can be achieved by minimizing the risk and uncertainty if reliable, sufficient and updated information are available about the above mentioned particulars. Regular information is needed at each stage of marketing management cycle (planning and decision making, organizing and staffing, directing and controlling).

In conclusion, the data or facts that can be used are called information. Reliable, updated and adequate information is needed for taking quick and rational decision avoiding risk and uncertainty. As information is obtained by selecting, classifying, analyzing and evaluating data, it can be directly used. Reliability of the information depends on the correctness of data.

Importance of Data and Information

As the information and data are the bases for analysis of strength, weakness, opportunity and threat (SWOT) of a firm, it can be taken as the basic resources. Information and data resources are also compulsory as the financial resource, physical resource and human resource. Its importance in marketing can be expressed in the following points:

1. Helps in decision making

Reliable, complete and updated information is needed for taking rational and quick decision on marketing. Without information proper decision cannot be taken by developing alternatives and evaluating them.

2. Helps in planning, implementing and controlling

Preparing a frame-work of the activity to be done in future is called planning. It works as the standard of measurement of the performance. So, plan should be prepared on the basis of reliable, updated and complete information. Without information no effective plan can be made.

Information is also necessary for implementation of marketing plans and programs. Information helps to take decision about goods, price, distribution and promotion and also to know competitors’ strategies. The objectives of marketing can be achieved only through successful implementation.

Information also helps in controlling. Information is compulsory for monitoring, evaluating and taking corrective steps.

3. Helps to scan marketing environment

Economic, political-legal, socio-cultural and technological components are the uncontrollable components of marketing environment. These components do not remain under the control of marketers. They are dynamic. Information is needed to scan such components for making proper strategy.

4. Helps to reduce risk and uncertainty

Quick and ration decision can be taken by using reliable, updated and complete information. Effectiveness comes in planning, implementation and controlling. As a result, risk and uncertainty get reduced. So, data and information have an important role in marketing.

Market segmentation Practices in Nepal

Nepal is a developing country advancing towards industrialization. It has completed tenth long-term plans and the eleventh has been undergoing. Business, agricultural industry and other industries have been affected by unstable politics, ever-changing economic policies, corruption etc. The labor oriented industries have also reached a condition of
adopting existence strategy and the capital oriented industries also have not been able to compete in the global market. Only some assembly industries also have not been able to compete in the global market. Only some assembly industries and multinational companies have been doing well in Nepal. Nepal should encourage the small and agro based industries.

In the background of such industrial condition, Nepal has become a member of SAFTA and World Trade Organization (WTO). The pace of development of transport and communication has become fast. This affects the Nepalese market. So, the Nepalese entrepreneurs and businessmen have become conscious about market segmentation. The practice of market segmentation in Nepal can be studied under two heading: non-systematic segmentation and systematic segmentation.

1. Non-systematic segmentation

Market research should be carried out for systematic segmentation of market. It needs a lot of expense. Such kind of expense is supposed as extravagance in Nepal. The Nepalese entrepreneurs and businessman use non-systematic practices of market segment.
  • Competitors’ strategy: This is mostly used in Nepal. If the strategy what the competitors’ adopt is used, neither risk nor cost for market research is needed to bear. Although such strategy and practices are not original, the success can be achieved in competitors’ market share. The Nepal’s noodle companies have adopted this strategy.
  • Past experience: The Nepalese entrepreneurs and businessmen cannot adopt changes easily. They like to maintain their traditional experiences. The market segments are the same as they were in the past. They segment total market in the same methods even today.
  • Hunches: The other much practiced strategy of non-systematic segmentation is hunches strategy. Market can be segmented on the basis of knowledge, experience and background or imitation. This strategy may become successful or failure, it has no surety.
  • Indian product’s strategy: The flow of Indian products is much in Nepal. The Nepalese organizations adopt the same market segmentation strategy what the Indian business organizations adopt. Most of the Nepalese entrepreneurs and business organizations have practiced this strategy of market segmentation.

2. Systematic segmentation

In Nepal, not only non-systematic but also the market is segmented in systematic way on the basis of market research. Big business houses and multinational companies are found more mindful in market segmentation. They have adopted this (systematic segmentation) strategy in marketing their products. Mostly, systematic segmentation of market is made on the following bases in Nepal:-
  • Geographic segmentation: Geographic segmentation is based on the area, size of city, population density, climate etc. Geographic segmentation is found very popular in Nepal. It is also very simple.
  • Demographic segmentation: In Nepal, markets are segmented on the basis of population. Age, gender, family size, family life cycle, occupation, education, religion, etc. are the main bases of this segmentation. This is also very popular and much practiced in market segmentation.
  • Psychographic segmentation: In Nepal, markets are also segmented on the basis of customer’s psychology. The business organizations divide market on the basis of consumers’ social classes (lower, middle, or upper), life style (achievers, believers, or strivers), personality or status (compulsive, gregarious, authoritarian, or ambitious) etc.
  • Behavioral segmentation: In Nepal, behavioral segmentation of market is also in practice. The main bases of this segmentation are purchasing time, (regular or special), benefit, (quality, service, economy), consumers level (regular consumer, ex-consumer, future consumer), rate of consumption, (less, general, much), level of loyalty (full, high, low, middle), tendency towards products (indifference, positive, negative) etc.

Selection of Market Segment

After evaluating market segments, the suitable market segments should be selected to enter there. Analysis of market segments, market coverage, ethical considerations, inter-segment relationship etc. also should be considered for the selection of suitable market segments.
Factors to be considered to select market segments

1. Market segment analysis

At first market segments should be analyzed for selecting the best market segments. While analyzing the market segments, their size, growth rate and long-term profitability should be studied carefully. Besides this, weak and string aspects of present and possible competitors should also be studied and analyzed. Information
about possible market mix, possible total demand, weak and strong aspects of competitors, opportunities and threats of market segments, brand loyalty of customers, means and resources necessary to face threats in the market segments etc. should be collected and analyzed. Only then the select market segment becomes effective.

2. Market coverage

Market coverage plays a vital role to select the best market segment. Alternatives of market coverage are as follows:
  • Single segment coverage: Single market segment coverage is market centered strategy. Under this strategy a company selects only one market segment and prepares marketing mix for this.
Single segment coverage
In the above example, the company has taken single segment coverage and has selected only one market segment D from A – J segments. Adopting such centralized strategy the company gets both benefits and loss. Its positive aspects are achievement of specialization in market segment, effective marketing mix, increase in reputation/goodwill etc. whereas no distribution of risk, not to be able to go to more attractive market segment from less attractive segment etc. are its negative aspects.

  • Multi segment coverage: In this alternative, a company selects two or more segments at a time and prepares separate market strategies accordingly. This strategy helps the company to distribute risk in different market segments. In this the company becomes successful to promote sale and earn profit. While adopting multi segment coverage, it becomes easy for the company to go to more attractive segment from less attractive ones. But this strategy is more expensive. Preparing separate strategies for each marketing mix becomes costly.
Multi segment coverage
In the above example, the company has taken multi segment coverage alternative and has selected several market segments – B, E, G and J.

  • Product specialization: In this alternative, the company sells one types of product in several market segments. In other words, the company supplies only one kind of product to many market segments. The company uses slightly different marketing mix for each market segment. While adopting such strategy, the company can achieve specialization in one product. Marketing mix can be changed in less expense and risk is distributed in different segments.
Product specialization
From the above example, ABC Company has supplied the single product microscope in different segments for sale.
  • Market specialization: In this alternative the company selects only one market segment and deals with different types of products by specializing in them. While adopting such strategy good will of the company can be increased but the market cannot be expanded depending on only one market segment.
Market specialization
The above example has adopted market specialization strategy because it has supplied the XYZ company different types of goods to only one market segment that is B, or only those products which are used in hotels according to the nature of products.

  • Full market coverage: Under the full market coverage one company selects all the market segments as far as possible and deals with all the products under one line. For example: Nepal Bottlers Company has been selling its products in all markets segments. Similarly, IBM has adopted the strategy of full market coverage.

3. Ethical considerations

While selecting a best market segment, the interest of the society and customers also should be considered. No any harm should be made to society, customers and nation. So, a company should not consider profit only, it should be careful about ethical aspects also. Social responsibility should be given priority and social audit should be done.

4. Inter-segment relationship

While selecting market segment, inter-segment relationship should be maintained in performance and technical aspects. Through this relationship cost can be minimized by using same technology, same production process and same distribution channel.

Process of Market Segmentation

Market should not be segmented on the basis of guesses or hunch estimation. A proper basis and process should be followed for it. The main task are information collection, survey, analysis of information, profile preparation and selection of market segments.
Process of Market Segmentation

1. Survey

Collecting information through survey is the first stage of market segmentation. While collecting information special attention should be paid to customers’ need, interest, characters, features of product, brand awareness, product using style, customers’ tendency towards classification of goods, geographical and psychological features of customers etc. Besides this, information about education, age, fashion, practice and custom, religion, purchasing power, purchasing behavior, buying motives, purpose etc. should be collected. Business organization should adopt proper methods and processes to conduct market survey.

2. Analysis

After the information has been collected through survey, it should be carefully studied and analyzed. Proper statistical tools should be used to analyze the information. The demand affecting variables should be classified into special and general categories. Such variables should be analyzed in context of customers’ need and their characters.

3. Profiling

In the third stage, market segmentation profile should be prepared by identifying the basis of market segmentation. Profiles of each segment should be prepared on the basis of customers’ need and their character. Character and need of the customers of each segment can be identified by studying the profiles. Preparing profiles of each market segment several alternatives of market segments can be found from which better alternative can be selected.

4. Selection of the market segment

Selection of market segmentation is the final stage of market segmentation process. In this stage, the profile of market segmentation is evaluated carefully and one or more market segments are selected. The selected market segments are the targeted market of business organizations.

Evaluation of Market Segment

After completing the segmentation of market, they should be evaluated and better market segments should be identified. While evaluating market segment, the company should analyze the size of the segments, and growth, structural attraction of the segment and goal and resource of the company.

1. Segment size and growth

While evaluating market segment, at first information about sale, growth rate and expected profit should be collected and analyzed. The segment size and growth rate should be the best. But the size and growth rate should be looked comparatively. Some companies like to make their target those markets which have prospective of large quantity sale, high growth rate and high share of profit. But such market segment may not be attractive for all companies. The companies select the best market segment on the basis of their efficiency, means and resources.

2. Segment structural attractiveness

While evaluating market segment, the size, growth rate and profit should be analyzed and its structural attractiveness be considered. According to Michael Porter, the structural components to, affect attractiveness of market segments are competitors, substitute products, buyer’s power, suppliers’ power etc. should be studied.

  • Competitors: Market segments may be more competitive and may also be less. The market segments where there are already more competitors become less attractive. Similarly, if the competitors are more capable and aggressive, such market segment also becomes less attractive.
  • Substitute products: If a market segment has to face the competition with present and future substitute products, such market segment becomes structurally less attractive because a company becomes unsuccessful to earn profit.
  • Power of buyers: The power of buyers also affects market segment. If bargaining power of buyers is more than sellers’, they give pressure to decrease price, increase quality and increase other supply related services. As a result, attractiveness of market segment lessens.
  • Power suppliers: If powerful suppliers are in market segments, such segments become less attractive, because they become able to control price, quality and quantity of the products.

3. Company’s objectives and resources

Even if the size, growth and structurally attractive may be a market segment, the company should compulsorily consider its objective and resources. Some market segments may be attractive but they should be abandoned, if they are not suitable to the company’s long term objective. So, a company should select only those market segments which are suited to the company’s objective. Similarly, while analyzing market segments, production facilities, employees and their ability, financial condition, means and resources also should be considered.