Question

Discuss the value of good marketing research. Why is it needed by a company?

Explain the role of secondary data. Where do marketers obtain it? Describe the advantages and disadvantages of this data.

Explain the role of primary data. Where do marketers obtain it? Describe the advantages and disadvantages of this data.

Describe the terms reliability and validity. Provide an example of each. What is the role of reliability and of validity in marketing research?

Answer 1

Market research: Role of good marketing research lies in the fact that no company that starts its business wants to fail. For that a company needs to ascertain the opportunities in market. It needs to search for the gaps that could be exploited to get an advantage. To know what lacks in the existing products offered by competitors, what the customer wants and what are the trends in the market helps out in market positioning and market penetration.

So, to summarize, a company needs good market research to understand the competition, customer's expectations and needs, the past trends, the innovation gap, and the favorability of business environment in that sector. This saves time and resources by contributing in better strategic planning, helps in company's positioning, market tapping and market penetration.

Secondary data: Secondary data is one that is not collected by the user. In market research, companies render secondary data from various sources like the ones collected by government agencies, internet sources, internet sources, dedicated magazines, trade associations, specialized private agencies, etc. The data comes with its own advantaged and disadvantages.

Advantages: Secondary data is best when it comes to saving time and resources. Collecting data is a cumbersome process and secondary data saves the time and resources as it is collected by someone else. Also the data collected by sources that specialize in data collection is often considered more cogent as a company might lack data collection expertise.

Disadvantages: Secondary data could come at a price as it is not always available free of cost. Also, the data might not provide all the projections as needed by the company. The data may lack the parameters that the company requires for an indicator. There is also a question of the data reliability. Since, it is not collected by the company itself, its reliability could be a matter of question. Also there is the time lag. To conduct a market research in current period, a better data will be one from the same period. However, mostly it is hard to find a secondary data for the most recent of times.

Primary data: Primary data is one that is collected by the user itself. It is collected through surveys, experiments, telephonic interviews, direct interviews, questionnaires, focus groups, etc.

Advantages: Since the primary data is collected exactly as per the need, based of required parameters, it is very useful. A company can make most of it as it is exactly what it needs. Also, it is considered reliable and applicable as it is sincerely collected for own use, in the required time period.

Disadvantages: Primary data collection requires a lot of money and other resources including time, and for a new company it is often a toll on the budget.

Reliability and validity: To measure or to collect data, we use some tools. What the tool measures, that is, the outcome or the measurement is our requirement (it makes up the data). How exact the measurement of the tool is to the real value it claims to assess is its validity. Whereas, the consistency of the tool's assessment/measurement gives its reliability.

Example: If a company needs to assess the favorite brand of biscuits of the same price, it decides that it will use the tool of total units sold of each biscuit brand in the grocery stores. It does not consider the offered discount. Now if the result of the favourite biscuit brand is same in all the stores over the period of time, the data is reliable (case of reliability) as the repetition of experiment produces consistent result. However, if the discount is removed and the result of the favorite biscuit brand changes, the data is considered not-valid (case of validity), as the true result was being influenced by the error caused out of the discount offer.

The role of reliability and validity lies in the fact that an erroneous data can negatively influence market strategies and end up causing losses. For the data to be useful, it is required for it to be valid and reliable else there is no use in considering it in the process of market research and strategy making.