Market Research

Sales &
Distribution

Group 5, Section C
 What is Market Research ?
It is Systematic and Objective

❖ Identification
❖ Collection
❖ Analysis
❖ Dissemination
❖ Use

of Information for improving decision making

related to the identification and solution of

business problems
Why do companies go for Market Research ?

Problem Identification Research Problem Solving Research

What are the problems faced by How can we solve the problems
our customers? faced by our customers ?
- Market Potential Research
- Segmentation Research
- Market Share Research
- Product Research
- Forecasting Research
- Pricing Research
- Sales Analysis Research
- Promotion Research
- Market Characteristics
- Distribution Research
How is the Information used?
Identify, Define Market Problems
Generate, Refine and Evaluate

Monitor Performance

Improve understanding
about Marketing
Top Market Research Companies in India
Features of Good Marketing Research

-Clearly stated Purpose, Scope and Domain

-Systematic and Detailed Plan
-Logical Justification
-Unbiased, Objective presentation of results
-Ethical
-Replicable
Time for a
Quiz !!!!
Marketing Research Process - 6 stages
Marketing Research Process - 6 stages
 Scaling
•What is scaling?
Quantifying the statements

•Why we need scaling?

How’s the drink?
Scaling techniques
Primary Scales of Measurement
Nominal Scale
❖ Numbers - only as labels or tags for identification and classification
❖ Do not reflect amount of characteristic - cannot compare
❖ E.g. Jersey No

Ordinal Scale
❖ Ranking scale, can compare – more or less
❖ Numbers assigned to indicate the relative extent of certain characteristics
❖ Indicates position not the distance
❖ E.g. Used to determine students' preferences among 5 brands of laptops
Interval Scale
❖ Numerically equal distance on scale represents equal distance in
characteristics
❖ Difference between 1 and 2 is equal to distance between 2 and 3 or 3 and 4
❖ Ratios do not make sense
❖ E.g. Temperature scale, Is 20˚ C twice as hot as 10˚ C?

Ratio Scale
❖ Possesses all the properties of nominal, ordinal and interval scales
❖ Meaningful to compute ratios
❖ E.g. height, weight, age, money
Sampling
The sampling design process
1) Define the Target Population
2) Determine the Sampling Frame
▪ A list or set of directions for identifying the target population
▪ Examples- Telephone directory, mailing lists, voter list

3) Select a Sampling Technique

•Probabilistic- Equal chance of being selected as a sample
•Non-probabilistic sampling- Unknown who will be selected as a
sample from the given population
4) Determining The Sample Size
Important qualitative factors:
• Nature of research
• The number of variables
• Sample sizes used in similar studies
• Completion rates
• Resource constraints

5) Execute The Sampling Process

Operationalize the decisions taken in first 4 steps
Causal Research (Explanatory research)
● Conducted in order to identify the extent and nature of cause-and-effect relationships
● Focus on an analysis of a situation or a specific problem to explain the patterns of relationships between
variables

Three important components:

1. Temporal sequence. The cause must occur before the effect. For example, it would not be appropriate
to credit the increase in sales to rebranding efforts if the increase had started before the rebranding.

2. Concomitant variation. When the cause changes, we can also observe a change in the effect. For
example, if a company doesn’t change its employee training and development practices, then changes in
customer satisfaction cannot be caused by employee training and development.

3. Nonspurious association. Any covariation between a cause and an effect must be true and not simply
due to other variable. For example, a notebook manufacturer has discovered a correlation between
notebooks and the autumn season
Perception about Causal Research
Ordinary Meaning Scientific Meaning

● X is the only cause of Y ● X is only one of a number of

● X must always lead to Y (X possible causes of Y
is a deterministic cause of ● The occurrence of X makes
Y). the occurrence of Y more
● It is possible to prove that probable (X is a probabilistic
X is a cause of Y. cause of Y).
● We can never prove that X is a
cause of Y. At best, we can
infer that X is a cause of Y
What does controlling a variable mean?
 Factor Analysis
WHAT IS FACTOR ANALYSIS & WHEN WE DO IT?

Purpose of factor analysis is to describe the covariance

relationship among many variables in terms of a few
underlying but UNOBSERVABLE RANDOM QUANTITIES
called “FACTORS”.

Suppose variables can be grouped by their correlation i.e.

all variables within a particular group are highly correlated
among themselves but have relatively small correlation
with variables of different group.

Then it is conceivable that each group of variables

represent a single factor that is responsible for the
observed correlations.
THREE STAGES IN FACTOR ANALYSIS :

First, a correlation matrix is generated for all the

variables.

Second, factors are extracted from the correlation

matrix based on
the correlation coefficients of the variables. (i.e.
EXTRACTION)
Here extraction method is Principal Component
Analysis.

Third, the factors are rotated in order to maximize the

relationship
between the variables and some of the factors. (i.e.
ROTATION)
The rotational method is Varimax .
Output and Explanation
Diagrammatic Presentation
 Cluster Analysis
HOW DOES IT WORK

The primary objective of cluster analysis is to define the structure of the data by placing the most similar observations
into groups. To accomplish this task, we must address three basic questions:

◦ How do we measure similarity?

◦ How do we form clusters?

◦ How many groups do we form?

MEASURING SIMILARITY

Similarity represents the degree of correspondence among objects across all of the characteristics used in the
analysis. It is a set of rules that serve as criteria for grouping or separating items.

◦ Correlational measures. - Less frequently used, where large values of r‟s do indicate similarity

◦ Distance Measures.- Most often used as a measure of similarity, with higher values representing greater
dissimilarity (distance between cases), not similarity
Hierarchical Cluster Analysis:

Agglomerative Algorithm -Hierarchical procedure that begins with each object or observation in a separate cluster. In
each subsequent step, the two clusters that are most similar are combined to build a new aggregate cluster. The
process is repeated until all objects a finally combined into a single clusters. From n clusters to 1.

Divisive Algorithm -Begins with all objects in single cluster, which is then divided at each step into two additional
clusters that contain the most dissimilar objects. The single cluster is divided into two clusters, then one of these
clusters is split for a total of three clusters. This continues until all observations are in a single – member clusters. From
1 cluster to n sub clusters

Non Hierarchical Cluster Analysis:

In contrast to Hierarchical Method, the NHCA do not involve the treelike construction
process. Instead, they assign objects into clusters once the number of clusters is
specified. ◦(Eg. K-means Clustering)
Two steps in Non HCA
1.) Specify Cluster Seed – identify starting points
2.) Assignment – assign each observation to one of the cluster seeds
Similarity Measure

Both graph have the

same r = 1, which implies
to have a same pattern.
But the distances (d‟s)
are not equal.
01 02 03
◦ Single – Linkage ◦ Complete – Linkage Average – Linkage
defines similarity between distance between two clusters is average distance between all
clusters as the shortest distance based on the maximum distance pairs of the two clusters‟
from any object in one cluster to between any two members in the
members
any object in the other. two clusters.

04 05

Centroid Method Ward‟s Method

The distance between the two
clusters equals the distance between
Consider joining 2 clusters ,How
the two cluster centroids. does it change the total distance
from centroids?
Lets see a problem
This file only includes 20 cases, each responding to items on demographics (gender, qualifications, days absence
from work, whether they smoke or not), on their attitudes to smoking in public places (subtest totals for pro and
anti), plus total scale score for self-concept. We are attempting to determine how many natural groups exist and
who belongs to each group.
We now proceed by conducting a one-way ANOVA to determine on which classifying variables are
significantly different between the groups

The ANOVA test allows a

comparison of more than two
groups at the same time to
determine whether a relationship
exists between them. The result
of the ANOVA formula, the F
statistic (also called the F-ratio),
allows for the analysis of multiple
groups of data to determine the
variability between samples and
within samples.

Qualifications did not produce any

significant associations
 Discriminant Analysis
Linear Discriminant Analysis is a statistical test used to predict a single categorical
variable using one or more other continuous variables.

Assumptions for Linear Discriminant Analysis

Every statistical method has assumptions. Assumptions mean that your data must satisfy certain properties in order for
statistical method results to be accurate.

The assumptions for Linear Discriminant Analysis include:

1. Linearity
2. No Outliers
3. Independence
4. No Multicollinearity
5. Similar Spread Across Range
6. Normality
cases were used in the analysis.

● We also see the number of cases for

● The output above indicates
each outcome variable at each level
that all 244 cases were used
of the grouping variable.
in the analysis.
 High eigen
values to
higher
discriminatin
g ability of
the function

These coefficients can be

used to calculate the
discriminant score for a
given case

discriminant_score_1 = 0.517*conservative + 0.379*outdoor – 0.831*social.

discriminant_score_2 = 0.926*outdoor + 0.213*social – 0.291*conservative.

Example
A large international air carrier has collected data on employees in three different job classifications:

1) customer service personnel,

2) mechanics and

3) dispatchers.

The director of Human Resources wants to know if these three job classifications appeal to different
personality types. Each employee is administered a battery of psychological test which include
measures of interest in outdoor activity, sociability and conservativeness.

The dataset has 244 observations on four variables. The psychological variables are outdoor
interests, social and conservative. The categorical variable is job type with three levels;

1) customer service, 2) mechanic, and 3) dispatcher.

 Recent Advances in Market Research

Automation and artificial intelligence

Chatbot

Virtual Assistants

Social Media Analytics

VR and AR
How FMCG will benefit from recent advances?

- Improving workflows
- Understanding customer
behaviour
- Improving customer behaviour
- Making the best of marketing and
ad spends
- Ensuring better customer
experiences
 Challenges in Market Research
Data Quality - Ensure the quality of data gathered and processed

Data security and compliance - Data security has become a hurdle for market research companies

User experience - The value of user experience has extended so deeply

Real-time Consumer insights - vital for market researchers to map historical and actual-time data

Dealing with market ambiguity - Organizations may get an advantage over the competition and begin to
provide experiences appropriate for the new workplace by devoting more time and money to market research.

Getting leaders to invest - In one survey, 21% of respondents named conveying ROI and business effect
as one of their main problems in conducting market research. It’s getting difficult to leaders to invest in
such market research.
 Sales &
Distribution
 Need for Marketing Channels

Producers Consumers

Typically produce goods: Typically consume goods:

- At limited locations
- All over the country
- In very large quantities
- In limited quantities
- With limited variety
- With large assortment
- All over the year
- Whenever they want

❖ Difference between production of goods (by producers) & consumption

of goods (by consumers) is bridged by marketing channels.
 Distribution Management
● Market Channels are sets of interdependent
organizations involved in the process of making product /
service available for consumption/use
● Distribution Management is the management of
distribution channels / marketing channels
● Retail is the market channel which sells to end consumer.
 Functions of Marketing
Channels

Carrying Demand Physical

Inventory Generation Distribution

Extending After Sales Consumer

Credit Service Search
 Universal Flows in Marketing Channels
Physical possession — Successive storage & movement of physical products from producer to customers.

Ownership/Title — Actual transfer of ownership from one organization/person to another .

Negotiation — Attempt to reach final agreement on price/other terms so that transaction takes place.

Promotion — Development/Dissemination of persuasive communication designed to attract consumers.

Financing — Acquisition/Allocation of funds required to finance inventories at different levels of the marketing channel.

Risk taking — Assuming risk connected with carrying out channel work/activities.

Ordering — Marketing Channel member's communication of intention to buy from manufacturer/producer.

Payment — Buyer's payment for goods/to clear bills through banks/financial institutions/others.

Information — Collection/dissemination of market information about product/current customer/ competitors/other

players in marketing environment.
 Universal Flows in Marketing Channels
Physical possession — Successive storage & movement of physical products from producer to customers.

Ownership/Title — Actual transfer of ownership from one organization/person to another .

Negotiation — Attempt to reach final agreement on price/other terms so that transaction takes place.

Promotion — Development/Dissemination of persuasive communication designed to attract consumers.

Financing — Acquisition/Allocation of funds required to finance inventories at different levels of the marketing channel.

Risk taking — Assuming risk connected with carrying out channel work/activities.

Ordering — Marketing Channel member's communication of intention to buy from manufacturer/producer.

Payment — Buyer's payment for goods/to clear bills through banks/financial institutions/others.

Information — Collection/dissemination of market information about product/current customer/ competitors/other

players in marketing environment.
Relationships in Channels
Time for a
Quiz !!!!
 Retailing
Retailing consists of activities involved in selling goods/services to the ultimate

consumer for personal consumption and use i.e. buyer is the end user,

buying motive is personal or family satisfaction.

Retailing characterized by

1) Margin & inventory turnover objectives

2) Variety & assortment of merchandise

3) Location & convenience factors

4) Customer service offered

 Characteristics of Retail
Services

1) High margins, low TO, high PS

2) Low margin, high TO, low PS
3) Low margin, high TO, high PS Retail

Turnover
Margins
 Strategic Profit Model(SPM)
Financial Performance of the retailers is maintained through:

• Profitability/ROI

• Liquidity/ability of the firm to meet financial liabilities within a time frame

• Asset Turnover (Net sales/Total assets)

• Capital structuring or leverage ratio

• Growth pattern of sales/profit

• Sales/floor space (space productivity)

• Sales/employee (labour productivity)

• Sales/transaction (merchandising activity productivity) Growth potential of sales/profits

Concept of Margin for Channels
 Margin Management
Margin indicates cost & price effectiveness of retailer.

- Recovers cost of merchandise or service

- Recovers expense of operating the business inducting depreciation

- Covers cost of borrowed funds

- Leave reasonable compensation to owner for providing capital at risk

Higher margins of the retailer can be achieved through:

- Better purchasing through supplier consolidation

- Mark-down control on non-price sensitive items

- Reduced shrinkage via measurement & control

- Merchandising mix planning

- Suggestion selling of higher margin products

 Channel Design: Bucklin’s Theory

Other things being equal, end users will prefer to deal with

that marketing channel which provides higher level of service output.

Service output is made up of:

- Spatial convenience

- Lot size

- Waiting/delivery time

- Product variety

- After Sales Service

 Establishing Channel Objectives
-Objectives need to be stated in terms of targeted service output levels.

- Channel institution should arrange their functional tasks so as to minimize their total channel

costs with respect to their desired level of service outputs

- Channel objectives would depend on the type of product( perishables for examples)

- Channel should also account for strengths and weaknesses of intermediaries

- Competitor’s channels should also be analyzed before establishing the channel objectives.
 Channel Conflict
Channel conflict occurs when brands interfere with their partners’ ability to sell and

distribute products to customers. It typically occurs when a brand begins selling its products

directly to consumers, disrupting channel partnerships with distributors, retailers, and agents .
 Types of Conflict

Vertical Level Conflict- It occurs when two or more channel members — operating at consecutive levels of a
distribution channel — have a dispute. For example, if a wholesaler consistently fails to deliver the proper volume of a
manufacturer's product to a retailer, a vertical level conflict between the two parties might arise.

Horizontal level Conflict- It occurs when two channel members, operating at the same level of a distribution channel,
have a dispute or disagreement that impedes the flow of the broader operation.For instance, let's say your business
distributes your product to two wholesalers, covering retailers in separate regions.

Inter-type channel Conflict- It occurs when two channel partners of different sizes or nature have a dispute.For
example, a manufacturer might supply a large retailer and a small retailer with different items from its product line.

Multi-channel level Conflict- It occurs when channel partners at various levels of the distribution chain compete with
one another by selling to the same market. For instance, if a brick and mortar retailer was to sell a brand's products at
a lower-price point than an ecommerce outlet, a multi-channel level conflict might arise.
 Personal Selling
Personal selling is face-to-face selling, where one
person, the salesman, tries to convince the
customer to buy a product assigned by the
company.

Personal selling is just a method of

implementing marketing plans.
Salesmanship:
Salesmanship is the art of persuading prospect to buy product or
service through which they can derive suitable benefits.

A good salesman adjusts their personality based on the prospect's

personality, as the outcome of the sale depends on the buyer-seller
mutual relationship.
Is sale only dependent on salesmanship?
 Sales Process
1.Prospecting 3. Approach

The first task is to find the Asking the buyer to

prospect by mapping commit to meeting without
consumer profile with knowing their need
demographic and sales
data.

4. Need
2. Pre- Approach
Identification
Gathering data about the Identifying the needs of
prospect before meeting the buyer using the SPIN
them . and also gathering
information about the
decision making process
 Sales Process
5. Presentation 7. Closing

The next step of the It is the step when sale is

process is describing the closed. If the close has
product and if possible failed then the salesman
showing demo. FEMA can should try another close.
be used to demonstrate
the value of product.

6.Objection 8. Follow Up /
handling Implementation
DAPA can be used to The objective of this step
handle the objections of is to ensure proper
the buyer. delivery of the product and
to get a feedback about
the product.
 Sales Management:
Sales Management is the planning, direction & control of personal selling.

Sales Managers are responsible for:

1. Personal Selling Activities

2. Manage personal sales force

3. Organizing sales efforts within/outside the organization.

Objectives of the sales Management are:

1. Increase the sales volume

2. Contribution to profits

3. Continuous Growth
 Salesforce Compensation:
Salesforce compensation is the single most significant investment for most
B2B companies.

Progressive companies get better performance from their sales teams by

treating their sales force as a portfolio of investments which require a different
level and kinds of attention.

There are 3 types of salespersons:

1. Stars: Achieves most of the targets, may stop working if a ceiling is imposed

2. Laggards: Need more guidance to achieve potential sales

3. Core Performers: In between stars and laggards

 Recent Advances in Sales and
Distribution
Robust CRM Platforms :
Intelligent platforms like process driven CRM Creatio, provides opportunities for multichannel communications,
full control of the customer journey & routine task Automation

Chatbots :
AI powered chatbots support customers 24/7. They enable replying to basic queries or resolving issues, reducing
the need for customer service interactions. Growth of global chatbot market is projected to reach $1.34 billion by
2024
 The Internet Of Things:
Companies can now use the power of IOT devices and applications to collect and scrutinize customer data in
real time, resulting in streamlining the discovery of customer needs and forecasting further opportunities.

AR and VR :
AR and VR technologies are significant for companies that depends on the visual impact to propel sales growth.
AR & VR serve as powerful instruments that help e-commerce offer interactive shopping and virtual product
experience for customers.

Speech recognition & Call analytics:

With ML and AI solutions, company can analyze this data to make informed decisions and apply the results in
many practical ways such as - Better understand customer needs, Monitor script adherence, train sales reps
 Thank You
for listening !