Unit 10: Market Research and Analysis
According to The Chartered Institute of Marketing, who define marketing as “The management process responsible for identifying, anticipating and satisfying customer requirements profitably,” there are several key marketing principles and practices involved with marketing from planning, branding, communication, market research, consumer psychology and measuring the effectiveness of the marketing campaign in general; a marketing campaign is the term I will use to describe the act of marketing. In our lessons we have discussed some of these and I have also carried out my own research which has enabled me to write this report to help show that I understand the key concepts and principles of marketing, the key concepts I will mostly focus on will be SMART, SWOT, PESTLE (these acronyms will be explained later), marketing objectives and the marketing mix, I shall also provide and explain, with examples of real, UK based businesses, some of the activities a business may carry out at any point in their marketing campaign.
I think we can better understand what marketing is if consider it as an umbrella term given to an overall strategy a business will use to effectively place themselves in front of customers, both new and existing customers. Marketing is essential for any business to be able to get their products, services or brand in front of the right people, at the right time and more importantly, to make sure there product is what the customers want; it is important for a business to carry out market research and base their decisions on these findings rather than guessing, companies like Alphabet (the parent company of Google) will pour thousands into market research from their customers and partners and their own service users, one key way they do this is by ensuring a “feedback” button is available on all of the pages of their websites.
It is nearly impossible to conduct an effective marketing campaign without first carrying out proper market research. Some companies, especially larger ones, will outsource market research to agencies but for smaller businesses, this isn’t always possible. There are also many tools available to conduct various types of market research which we will explore later. There can be multiple reasons as to why a business will carry out market research, such as to assess the potential demand for a new product or service, to understand how their existing customers feel about an established product or service or even to find out how their customers feel about them as a company; simply put, the intention of market research is to understand the market (the customers, their own brand, their competitors, their customers opinions on products both new and existing, etc.) and learn about new market trends in the hopes of being able to better predict which direction the market is heading. It is through this data that companies can really understand what their customers want and target them with the most effective advertising.
Before we go on to discuss the tools used in marketing, it is important to understand that marketing is not the same as advertising, advertising is something a business would do as part of their marketing campaign and similarly, not all businesses advertise through conventional channels (such as those who operate Multi-Level Marketing businesses like Avon, Forever Living and many others who rely on their affiliates and distributors to ‘wear the brand’ rather than spend a large amount of money on advertising).
Now I have explained the overall concept and definition of marketing, as well as the difference between marketing and advertising, it is important to understand the difference between an organisational objective and a marketing objective because these are very important as they can often easily be misunderstood for one another. An organisational objective is something a business wants to achieve; whereas, a marketing objective is something a business hopes to achieve as a result of their marketing campaign. A marketing objective is often defined before planning begins but it is dynamic in the sense where it can change upon the results of market research or the response generated from advertising and many other factors whereas an organisational objective rarely changes and often forms the foundation of a business’ principles, with that being said, an organisational objective may change given extreme market changes.
In our introduction, we mentioned some acronyms which are part of something called the Macro Market Analysis, this is like a toolbox a business would use when planning their marketing campaigns and like any tool box, the tools inside may fit only one fixture or multiple, those acronyms are explained below;
Though the above only expands the acronym, it doesn’t give us very much in the way of what they actually mean so;
Because Pestle has such a large area to cover, we will break it down into it’s own individual headings to define what they are, so;
Political:
The government have an effect on many industries and depending on the political standing of a country, some marketing practices can be affected whereas in certain industries, some key concepts of marketing (such as advertising) are simply outlawed whereas in other industries (like gambling), they may be heavily regulated. For example, Ladbrokes is a very reputable gambling merchant who own a host of betting shops throughout the UK and also operate online, they are heavily regulated by the betting commission, an independent body acting on behalf of the government, any advertising from Ladbrokes (and the same is true of all gambling providers who operate in the United Kingdom, regardless of where they’re based) will be forced to place “Gamble Aware” notices on all of their advertising and in their own betting shops and also have contact details readily available to gambling addiction support networks, Paddy Power (before it merged with Betfair, however it is still true since it merged) used to be based outside of the UK and therefore were mostly exempt from typical gambling rules online even though they had UK customers however, their betting shops and advertising in the UK was just as heavily regulated as Ladbrokes and other UK based betting shops. Another heavily regulated by the government (or on behalf of the government) is the alcohol and tobacco industry and now, even the pharmaceutical industry including companies who are licenced to produce paracetamol, such as Nurofen.
Economic:
Economic factors heavily influence the decisions a company may take, for example, recently the pound has fallen to an all-time low in over ten years against the dollar meaning that businesses who import from America, like NovaTech (a UK based component wholesaler) will find their products, such as AMD Radeon processors will cost more to import whereas for companies like Thomas Cook (a UK based travel agency) will find their profits increase because it is cheaper for people outside of the UK to come here, this also has a positive effect on Thomas Cook, as a public company’s, share price meaning it is also attractive for investors, I mention the share price to demonstrate the versatility of PESTLE which can be used in many different scenarios.
Social:
Social factors are easy to understand but they are also known as Socio-cultural factors so it is important to understand they are one and the same, basically the social factor of PESTLE means taking into account people’s beliefs and attitudes, the size of the population and even the demographics of individuals within that population based on factors such as age, health, career, income, gender, religion and so on. This is very important to marketers because it has a direct effect on how much or how little they understand about their customers and what drives them; a marketer is the personnel (whether just one person or a group of people) who are responsible for the marketing a company carries out. An example of social factors influencing a company would be McDonalds, the multi-national fast-food company founded in the USA but also based in the UK and many other countries, when they chose to open their first restaurant in India who have a large Hindu population and where, in the majority of the population’s religion, it is forbidden to consume beef, it would be almost pointless selling their traditional burgers with a beef patty so because of this specific factor, the McDonalds in India does not sell any beef products whatsoever and uses a substitute in its place, similarly they focus more on vegetarian-friendly foods because a large proportion of India are also vegetarian.
Technological
In 2016, with technology advancing at a similar rate to the 1990’s, technological factors are really important to keep in mind. Technological factors can make or break the viability of a product and marketing campaign depending on whether or not the technology exists or is advanced or low cost enough to make the objective achievable. For example, last year there was a dairy crisis which is still affecting British farmers today in the sense that supermarkets are paying a ridiculously low amount per pint to the extent that farmers are making a loss, this has forced them to look for cheaper alternatives of producing milk which has also lead to more contaminated batches of milk with harmful bacteria, this concerns government departments of agriculture and demonstrates how one factor can have an effect on another. Similarly, a US film production company had to wait fourteen years to create the film Avatar because technology simply did not exist when the film started production, thankfully the risk paid off for the company but the mere fact they could have been waiting far longer and the film may not have been a success, I believe it was a reckless business decision but with that being said, higher risk usually comes with higher reward (this is evident in controversial advertising such as shock tactics used in the “Think Bike” television adverts where a marketers know they may cause extreme offense or upset to some individuals).
Environmental
Earlier formats of PESTLE did not include the E on the end because environmental factors have only become really important as a result of the scarcity of raw materials, pollution, noise and light level and the effects of global warning. The environmental part of the PESTLE tool also allows a business to assess how ethical their ideas are, one example of this would be PETA, an anti-animal-cruelty charity whose organisational objective is to end animal cruelty worldwide and use shock tactics to achieve their marketing objectives by targeting specific types of animal abuse. Other environmental factors may include renewable energy sources and things an organisation can do to lower its own carbon footprint, whether that be sourcing locally made products where possible or, like Trent Barton, a Nottingham based bus company, who are replacing their old, diesel-run busses with electric busses to lower their own carbon footprint. Another example of taking environmental factors into account is National Grid, astonishingly, they ran the entire country for half an hour on nothing but energy generated from renewable sources like wind, water and sunlight. Companies like Southern Electric are helping customers monitor their own carbon footprint and giving them better control over their own spending (which is a social factor) with the introduction of Smart meters, they are replacing old meters for free because they realise it will help customers hopefully reduce their carbon footprint by being able to see a measurable difference between the amount of money they save when they remember to turn their lights off. Also, giving the Smart meters away for free is also a good promotional tactic, customers feel like they are worth more when they’re given incentives like free products but more on promotions later.
Legal
The legal factors are often called “red tape”, these include things like advertising standards, the law, regulatory bodies, health and safety, consumer rights, proper labelling of nutritional information on consumables, product safety and responsible advertising (such as appropriate warnings, as previously mentioned in the above political subsection) and equal opportunities. Swinton Group, an insurance company, seemed to not take legal factors into consideration when they found themselves at the receiving end of a Financial Conduct Authority (FCA), a regulatory body who governs banks, lenders and insurers and several other parts of the financial industry, investigation which resulted in a fine of nearly £7.5million. Lloyds, formerly Lloyds TSB, were found to be guilty of mis-selling payment protection insurance along with many other high street banks, including the now dissolved Northern Rock and Alliance & Leicester which would go on to be acquired by Santander causing them to have to set aside several billion pounds to cover the cost of their disregard of regulations set in place to protect the consumer by allowing them to make a fully informed decision on a product. We have also seen companies who aren’t multi-nationals but do operate in the UK from an international office such as Uber who have been slammed for initially going against private hire regulations in the UK which, after protests and petitions from taxi drivers and the public, forced Uber to comply with the law.
PESTLE, as mentioned above, can be used in many different scenarios though I think for the most part, it is incompatible with SWOT, however that does not mean to say that SWOT and PESTLE cannot be done together, the reason for this is because a side by side comparison is necessary. SMART targets however can be used prior to any other tool. Her Majesty’s Prison Service education sector uses SMART targets with their inmates and Blue Orchid, a UK Business Support organisation, advises business owners and managers to set SMART targets for their staff and similarly, marketers keep them in mind when marketing, for example it would be no good for a marketing agency to use a size 8 model in a photoshoot for a fashion company like JDWilliams, a UK based retail company whose parent company is NBrown, a US based firm who owns several companies in the retail industry, whose fashion caters mostly for heavier set women as this would not be relatable for their target market; also, JDWilliams bought out their own brand electronics and fashion brands called “JDW” and “Williams & Brown” respectively which they’d have most likely used a tool similar to SWOT to assess the viability of the product.
To recap, so far I have discussed and shown, with examples, understanding of;
Next, I will explain the marketing mix, also known as the 7p’s (sometimes referred to as the 4p’s however, for the purposes of this report we will include the extra three p’s) and their significance, why they are Important and by using examples, I will demonstrate how they can be adopted into different businesses who operate solely within the direct sales and fundraising industries. Then, I will go on to discuss marketing techniques such as segmentation and how these final points can influence purchasing behaviour.
So, what are the 7p’s? Again, I shall bullet point them below and then give explanations under headings followed by examples of the 7p’s in practice;
Product
A product is designed and built to satisfy the needs of a certain group of people (your overall target market), a product can be tangible goods, physical stock such as fruit and vegetables sold by Leicester Market traders or it could be intangible, services like hair and beauty treatments. It’s important a marketer pays special attention to this as without a product, you have absolutely nothing, whether it’s a charity like the PDSA who carry out mostly free vet care on a donations system and also accept donations or a company like Tesco who sell physical goods for profit or UK based charity Shelter whose product is personal-gratification knowing you’re helping a good cause, without a product, there is no money to be made, in Shelters case, if they were not transparent with what they did with their donations and how the donations helped, far less people would donate.
Price
The price is extremely important and equally as critical as the product because this really will make or break a business. Price refers to the price the consumer pays for the product and the cost to the business involved in making the product/providing the service. If the cost of manufacturing or labour outweighs the retail price then a company will make a financial loss on the product but if they increase the price to the consumer, the consumer will expect better quality or simply may not think it is worth paying for, this has been seen in the automotive industry, in my opinion, the price of fuel became so high, people have sought alternatives such as electric cars, hybrids and even cycling or public transport – inadvertently, because of the sudden decline in demand for the petrol and the subsequent oversupply that followed, it has driven the overall price per barrel down to lows that haven’t been seen for several years which have cost investors billions, it has also had a knock on effect to the share price of oil companies like Shell whose business is mostly oil.
Price is also very important because you have to remain competitive unless you are offering something truly unique and you genuinely have no competitors, for example when Amstrad made computers at sometimes more than half the retail value of their competitors, they had their pricing strategies perfect because they were able to import cheap components from Japan. Pricing is also so important because it defines the overall profitability of a product and it’s important to get right first time again, because if it’s too high people won’t buy it and if it’s too low, the business will make a loss on that product which their business could depend on and also because changing the price of a product by just 1p can change your overall profit by millions of pounds (both negatively and positively) depending on how many units you have for sale. There are three pricing strategies which are most commonly used, Stagg Hairstyles, a Leicester hair salon which ceased trading as a result of the owner’s death in January 2013, used heavy competitive pricing strategies to charge less for specialised services to sway customers to return for the more expensive, less specialised services whereas Ungaro, another hair salon which had a more consistent pricing strategy and is still open today targeted rather affluent ladies mostly but used apprentices to be able to offer a lower-priced service to enable them to be able to compete with Stagg Hairstyles. The second pricing strategy is most commonly seen at the end of the day at close of trade at Leicester Market where traders will drop their prices at the same time and maintain a fair balance between the difference in pricing, this is often seen as the most ethical form of pricing strategy because it’s balanced and allows for everyone to earn their market share. The final pricing strategy and arguably the most effective but least ethical is heavily undercutting your competitors, however sometimes this is necessary as evident recently in the closure of BHS who sold everything from their stock to their light fittings at a fraction of retail value.
Place
Place is important in the sense that if a product isn’t in the right place, if the right people aren’t seeing your adverts, if your marketing campaign is failing then it is likely the placement is wrong because, if you have done your market research correctly, you’ll have got the product and price right. So, the placement is important because if your marketing is done online, it has to be targeting a way where people will see it, for example Google AdWords is no good if you’re a sole-trader plumber advertising in the general UK area because it wouldn’t be practical for people in London to see it if the plumber lived in Scotland because of the cost of fuel, even if it has fallen. Similarly, adult dentures wouldn’t sell very well in the confectionary aisle of a supermarket, however with Hallowe’en around the corner, they may be OK in the toy section. Alongside this, place also covers distribution, how will you get your product to your customer? Will your customer come to you like they were going to their local newsagent or would you ship your item to them like Iceland with their home delivery service? Is it digital like an eBook, perhaps? You have to consider the location of your customers as well as the location of your product, especially if you’re selling online.
Promotion
Promotion is probably just as vital as the pricing because without getting the word out there, nobody will hear it; in other words, without the right promotions, your product will not sell. Promotions are how you advertise a product, it can also include incentives as well as several other factors such as length of time individual advertising campaigns will last and budgets (also incorporated into Price) and it is also important because this is the component that will leave a mark on your target market, it will either drive sales up or it will drive them away. The way you promote your brand and product is of absolute paramount importance to your public relations (how people see your business) and likewise will either build or break the trust of the consumer which you need if a business is to ever become reputable.
People
The people involved in making the product and bringing it to market are just as important as those who are buying the product which is why many employers believe in treating their staff properly, it is important to understand what you need in terms of personal specifications of your staff to ensure they bring the best qualities to the table. People with a high asset value in terms of their skills and abilities and credibility are important because it will influence the outcome of the product itself or how it is brought to market. It is important, especially for start-ups, as Pact Coffee will tell you, to hire the right people and ensure they are passionate about their product; Pact Coffee are a UK based coffee supplier who source coffee from all over the world in ethical ways on a subscription basis who only hire those who are coffee lovers and enthusiasts, they also have an exceptional business model where they are currently gaining a lot of funding via crowdsourcing, promoted via social networking channels.
Physical Evidence
Physical evidence refers to how products are perceived in the marketplace, it is initially a prediction as to how it will be received and then once the product has been released, it will be measurable in terms of sales and revenue data and more recently, as a result of advanced software, social media analytics. A good example of physical evidence is in a company’s branding, Nike and Adidas will spring to mind when you think of sports because they are high-profile names, whereas Sports Direct who don’t spend so much on advertising and sponsorships aren’t a go-to brand even though it has the word “Sports” in their name.
Process
The process refers to how a business carries out their activities in a way that minimises costs and maximise profits, the government made several thousand redundancies in the private sector to minimise costs a few years ago and this was a process designed to improve the economy in the long term which has, arguably, worked. The process encompasses everything from taking on the right people to planning and market research, all the way through to release and analysing the data (sales, costs, profit, etc.) throughout. The process is dynamic in the sense where it can be changed and tweaked in line with changes in market trends and economical changes or other factors.
The significance of the 7p’s is quite simply to enable an organisation to understand who their target audience are. It’s all well and good to say “We will target men for our fashion industry.” Whilst leaving out important questions like; how old are our target market? What are their spending habits? Are they going to be one-off buyers or repeat customers? High class fashion or low cost everyday wear? If the organisation use the marketing mix they will be able to better target the market they’re aiming for or, as what happens in many companies, they may find their product would actually be suited to a much different market; The company who originally owned what is known today as Play-Doh initially started out as a household cleaning product but parents were giving this child-safe putty to their children to play with whilst they used other products to clean to keep them entertained, one savvy entrepreneur bought the rights to the putty, added different colouring agents and remarketed it as a toy for children, adding millions of dollars in revenue as a result. To define what the marketing mix actually is, you could put it simply as putting the right product in front of the right people at the right time with the right promotion, if all of these factors are met, you will be hitting your target market; these factors come into play together and where product can be a service instead, they all interlink and are absolutely essential according to some experts, including E. Jerome McCarthy who first developed the 4ps in the 1960’s.
Next, I shall discuss market segmentation. Market segmentation is similar to the marketing mix but the difference is that, typically, market segmentation typically remains consistent whereas the marketing mix is dynamic and can change over time, dependent upon results. The segments are important because it allows a business to really hone in on their target audience based on certain characteristics which can be broken down into several headings but the main ones are;
Moving forward, we will be talking about market research and the various stages an organisation may complete whilst planning, carrying out their market research or upon evaluation of the collected data. We will start by exploring the different methods of market research which include internal and external market research as well as primary and secondary, we will also assess the positive and negative traits each method has and then we will speculate about how some UK businesses may use each method. So;
By carrying out the above steps correctly, an entrepreneur should have a thorough understanding of who their customers are and more importantly, how viable their marketing strategy is. The key reason we do market research is to be able to understand what it is that will make your audience tick; Marks and Spencer (M&S), a well-known company in the retail sector, used to have a much larger market share of the older and female audiences however, a few years ago they tried to appeal to a more younger audience with their luxury food products with their arguably highly sexualised “This is not just X, this is Marks and Spencer X” (where “X” represents whichever food product they were marketing at any specific time, most memorable to myself is wine and potatoes); in my opinion and from general observation of the Leicester city centre store, I think M&S has succeeded in encouraging younger shoppers to spend money with them – this is evident in their fashion section whose instore marketing appeals more towards audiences 30+ rather than the traditional older customers they used to appeal to, this is a good thing because if M&S continued marketing their products towards the older generation, their market share would fall as their customers, unfortunately, died of old age or illnesses that older people are more prone to.
The way an organisation collects their data can take many different forms, for example they can use one or more different methods to collect data such as questionnaires (both telephone and postal) and interviews (over the phone or face to face) and more.
Ipsos-Mori collect data both online and in person by sending surveyors door-to-door, as previously mentioned they will then sell this data or otherwise, they may have already been paid and carrying out research on behalf of a company.
The final marketing tool we will talk about is relatively new in comparison to other more established marketing methods is the use of social media in business. Companies like Tesco and Sainsbury’s have such a strong social network presence that they can have public disagreements about whose products are better, this kind of informal banter allows them to promote their own products whilst at the same time, as a result of the humour which drives retweets (on Twitter) or shares (on Facebook) and replies, this triggers an algorithm which further promotes the pages and although, yes it may be true that these companies who use social media (especially Just-Eat) have high social media advertising budgets but as a result of their overall presence, it could be argued that this spending is only necessary to try and get ahead, in my opinion, their online presence and their overall consistency on social media generates plenty of organic views as it stands; with that being said, the more a company spends on advertising will have a more positive impact on the business (although for a small business like a newsagents, for example, where they only have one shop in a quiet village, a large advertising budget to cover the cost of nationwide advertising would be pointless because people wouldn’t travel to another city to visit a corner shop, no matter how special their offers are).
Before we move on to the conclusion, it’s important to also know that market research data can be collected in many different forms, depending on the location, the kind of people available to gather data from and several other factors, some of these include paper based surveys, digital surveys (like those carried out by Survey Monkey), some include participants to carry out an activity (I remember taking part in market research where a supermarket shelf had been erected and stacked and I had to wear a special pair of glasses which tracked where I looked and what caught my attention most effectively on the shelf, they did not explain the purpose of this data but it could be to better assist retailers in how they can stack their shelves better and more effectively). The point is, each method has it’s positive and negative drawbacks, such as where the participant is required to carry out a task, if it requires travelling or wearing something which then does not fit or for whatever reason, the participant is unable to carry out the task, it would waste the participant’s time as well as the person’s time who is collecting the data. With paper based surveys, there’s the risk of them getting lost and unless they are anonymous, it could increase the risk of a breach of data protection, this is also a risk with digitally collected data given the rise of online businesses who are being attacked by hackers. Digital surveys which are done remotely, such as those carried out by SurveyMonkey, are also unreliable; I know from experience how tedious some online surveys can be and eventually you find yourself just clicking random boxes without reading the questions just to get it over with – especially when it’s incentivised like OpinionOutpost who will pay a small amount of money to you in return for completing (after survey qualification criteria is also met) their survey; companies are getting on top of this practice that happens as a result of boredom by adding “trick” questions into surveys which instruct you on the answer to click on – should a participant fail this “trick” question, it will indicate to the assessor that the participant isn’t being accurate in their answers and will subsequently, usually, be disqualified from the survey.
In conclusion, marketing is really important to understand because it allows an organisation to find gaps in the market, whether it’s their current market or a new market, it also allows an organisation to properly identify any shortfalls in their marketing plan and to also get an idea of how individuals feel about them as a company whether it be the general public, their customers or their staff members. The point of marketing is to simply get an organisation or their product (or for political parties, their manifesto) in front of the right people and new people in the hopes of making these individuals buy their products, change brand loyalties or to inform their customers of any recalls (such as how Samsung have utilised the newspaper industry by creating a press release to inform customers of the new 7 series of gadgets (including the Samsung Galaxy 7 and Samsung Note 7), had Samsung carried out proper research into the components they were using it may have been avoided however, they used Tertiary research methods to understand what was going wrong with their devices which has allowed them to rectify the issue (by recalling the products and discontinuing production of the products). The reason marketing is so important, again, is to identify gaps in the market because if there isn’t a gap in the market, the business simply will not fit and it will be far more likely that the business will fail as a result of there being no gaps in the market or simply no market for them; some entrepreneurs have great ideas but nobody wants what they have to offer, by carrying out proper, effective market research, an entrepreneur will know whether or not there is a gap in the market for their product – with that being said, look at companies like Robotica who, in 1997, released PalmPilot who made a revolutionary breakthrough with their data syncing software but unfortunately, at the time there was no market but in 2016, every device syncs data, companies like Alphabet and Apple and Windows really perpetuated data syncing; my point is, just because there may not be a gap in or a market today doesn’t mean there won’t be tomorrow.
My final thoughts on marketing, market research and data analysis would be to remember that it isn’t just about advertising, particularly marketing; as mentioned several times throughout this assignment, it is really crucial to remember that marketing encompasses everything from the signage on the shop front to where an entrepreneur decides to base their business. It can also be how you answer the phone; one previous employer demanded we answer the phone in a uniform manner, “Good morning/afternoon/evening, you’ve come through to Stagg Hairstyles, my name is Andy, how may I help?” Admittedly, it did sound rather pompous, just typing it brings back memories of how ‘classy’ we tried to present ourselves throughout the time we worked at the quaint and very busy city centre salon, but even this, the way we answered the phone in Stagg Hairstyles, is part of marketing (or more specifically, it is part of the branding of the salon which in itself fits into marketing), speaking of brand – we were well known for the Austin Mini car front which was converted into a reception area; it was a very quirky salon with bicycle rims with hooks on the spokes to hang the gowns; the design of the salon played a large part in the overall branding of the salon. My point is, marketing is such a broad term, it encompasses so many different factors from market research to design to implementation and evaluation, it is easy to think marketing solely refers to the adverts you see online or on the TV; what we should remember as entrepreneurs or marketers is that this is simply not the case; the above steps we’ve explored are crucial to making decisions regarding the marketing of a business, the above steps carried out correctly could be the difference between a business being around for the long term or eventually just fading into obscurity because it doesn’t bring anything, for lack of a better word, special to the table..
Reference: