Unit seven. Marketing and advertising Text 1 Successful Market Research

The goal of market research is to reduce the risks associated with making business decisions. It can replace misinformation and assumptions with facts. Opinion and hearsay are not viable foundations on which to build a solid marketing strategy. Successful market research consists of four steps:

1. Define the specific nature of the problem to be investigated.

2. Collect data from available sources.

3. Analyze the data and interpret the results.

4. Draw conclusions.

Let’s consider the first step – define the problem. The first, and the most crucial, step in market research is defining the research problem clearly and concisely. A common flaw at this stage is to confuse a symptom with the true problem. For example, dwindling sales is not a problem, but rather a symptom. To get to the heart of the issue, the owner must list all the possible factors that could have caused it. Is there new competition? Are the firm’s sales representatives impolite or unknowledgeable? Have customer’s tastes changed? Is the product line too narrow? Do customers have trouble finding what they want? The research question may be more general. What are my competitors up to and how do customers perceive my business in comparison to the competition? On the other hand, the owner may be interested in researching a specific type of question. What are the characteristics of my customers? What are their income levels? What radio stations do they listen to? Why do they shop here?

Market research is not restricted solely to business problems. Business owners can use it to uncover potential opportunities as well. For example, when the owner of a fitness center surveyed his customers, he discovered that many had an interest in aerobic exercises. He added an aerobics program, and within a year his revenues had grown by 25 percent.

Text 2 Choosing a Marketing Strategy

A marketing strategy results when the business owner blends together results from the four market research steps to develop a successful marketing mix. There are several marketing strategies the business can use to establish a competitive edge.

A market penetration strategy seeks to increase sales of existing products in current markets (or in current locations) through greater selling and advertising efforts.

On the other hand, a market development strategy attempts to increase sales by introducing existing products or services into new markets.

A product development strategy tries to increase sales by adding new goods and services in existing markets. These new products may be modifications of existing items or entirely new ones. For instance, a small fast-food restaurant whose menu is built around hamburgers might increase sales by adding ham, fish, and chicken dishes.

Market segmentation is another popular marketing strategy. Here, the business manager segments the mass market – that is, carves it up into smaller, more homogenous segments. This provides the opportunity to attack each segment with a specific marketing strategy designed to maximize the effectiveness of the marketing effort.

Closely tied to market segmentation is nichepicking – when a small business concentrates its marketing efforts on a single or a limited number of market segments. Rather than compete head-to-head, most businesses choose their niches carefully and defend them fiercely. A niche strategy is widely used by small companies and allows them to maximize the advantages of their smallness and to compete effectively even in industries dominated by giants.