UNIT – III

Identification of Business Opportunities

SWOT analysis Environment scanning-meaning and benefits Factors considered for
environment scanning. Sources and steps involved in identification of business
opportunities. Market research- meaning, need for market research, techniques in market
research field survey techniques, test marketing, Delphi technique, desk research,
observation method and experiment method.

Identification of Business Opportunities

SWOT analysis Environment scanning-meaning and benefits
Factors considered for environment scanning. Sources and steps involved in
identification of business opportunities.
Market research- meaning, need for market research
techniques in market research field survey techniques, test marketing
Delphi technique, desk research, observation method and experiment method.

SWOT Analysis:
The internal analysis of the firm identifies strength and weakness, and the
external analyses helps to observe opportunities and threats coming the way of business.
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a
framework used to evaluate a company's competitive position and to develop strategic
planning. SWOT analysis assesses internal and external factors, as well as current and
future potential.
A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look
at the strengths and weaknesses of an organization, initiatives, or within its industry. The
organization needs to keep the analysis accurate by avoiding pre-conceived beliefs or
gray areas and instead focusing on real-life contexts. Companies should use it as a guide
and not necessarily as a prescription.
SWOT Analysis stand for:
S – Analysing Strength of the firm ; W – Analysing weakness of the firm
O – Analysing opportunities of the firm; T – Analysing threats of the firm
It is rightly said that, the firm should maximise the strength, minimise the
weakness, grab the opportunities and diffuse off the threat for survival and growth of the
business firm.

Positive Negative
Strength (Internal) Weakness (Internal)
1. Technological skills 1. Absence of employee skill
2. Leading brands 2. Unreliable product
3. Distribution channels 3. Poor access to distribution
4. Customer relationship and Loyalty 4. Low customer retention
5. Management 5. Poor management
46
Opportunities (External): Threats (External):
1. Changing & unfulfilled customer need 1. Changing customer taste & emergence
of substitute product.
2. Technological advances 2. Arrival of new technologies
3. Favorable change in government 3. Unfavorable change in government
policies policies
4. Liberalisation of market 4. Closing of market

Components of SWOT Analysis

Every SWOT analysis will include the following four categories. Though the
elements and discoveries within these categories will vary from company to company, a
SWOT analysis is not complete without each of these elements:
Strengths
Strengths describe what an organization excels at and what separates it from the
competition: a strong brand, loyal customer base, a strong balance sheet, unique
technology, and so on. For example, a hedge fund may have developed a proprietary
trading strategy that returns market-beating results. It must then decide how to use those
results to attract new investors.
Weaknesses
Weaknesses stop an organization from performing at its optimum level. They are
areas where the business needs to improve to remain competitive: a weak brand, higher-
than-average turnover, high levels of debt, an inadequate supply chain, or lack of capital.

Opportunities
Opportunities refer to favorable external factors that could give an organization a
competitive advantage. For example, if a country cuts tariffs, a car manufacturer
can export its cars into a new market, increasing sales and market share.
Threats
Threats refer to factors that have the potential to harm an organization. For
example, a drought is a threat to a wheat-producing company, as it may destroy or
reduce the crop yield. Other common threats include things like rising costs for
materials, increasing competition, tight labor supply. and so on.
SWOT Table
Analysts present a SWOT analysis as a square segmented into four quadrants, each
dedicated to an element of SWOT. This visual arrangement provides a quick overview of
the company‟s position. Although all the points under a particular heading may not be of
equal importance, they all should represent key insights into the balance of opportunities
and threats, advantages and disadvantages, and so forth.

47
 Environmental analysis is the study of the organizational environment to
pinpoint environmental factors that can significantly influence organizational operations.
It is a process of gathering, analysing and dispensing information for effective purpose.
Scanning means detection. Environmental scanning means having a detailed
investigation of the environment. Environmental scanning can also be termed as SWOT
analyses. In order to survive and grow in a competitive business environment, it is
essential for every business firm to undertake SWOT analyses.
This is the process in which the enterprise monitors environmental factors to
identify opportunities and threats of the business. Environmental scanning is essential to
understand current and probable changes in the business environment comprising
economic, political, technological, cultural etc.
Environmental scanning is a process that systematically surveys and interprets
relevant data to identify external opportunities and threats that could influence future
decisions. It is closely related to a S.W.O.T. analysis and should be used as part of the
strategic planning process.
Components of external scanning that could be considered include
 Trends: What trends are occurring in the marketplace or industry that could affect the
organization either positively or negatively?
 Competition: What is your competition doing that provides them an advantage?
Where can you exploit your competition's weaknesses?
 Technology: What developments in technology may impact your business in the
future? Are there new technologies that can make your organization more efficient?
 Customers: How is your customer base changing? What is impacting your ability to
provide top-notch customer service?
48
 Economy: What is happening in the economy that could affect future business?
 Labor supply: What is the labor market like in the geographies where you operate?
How can you ensure ready access to high-demand workers?
 Political/legislative arena: What impact will election outcomes have on your
business? Is there impending legislation that will affect your operations?
Each organization must identify what external factors are most impactful to make
the environmental scan a useful tool.
The next step is to conduct an internal scan of the organization. Review the
company's vision, mission and strategic plan. Examine the organization's strengths and
weaknesses. Consider where the company is now and where it plans to be in five or 10
years. Interview or survey leaders of the company.
Once an organization has gathered information about the external world, its
competitors and itself, it should then develop strategies to respond to impacts when the
need arises.
When conducting an environmental scan, a variety of methods should be used to
collect data, including reviewing publications, conducting focus groups, interviewing
leaders inside and outside the organization, and administering surveys.
Environmental scanning is an important component of strategic planning as it
provides information on factors that will affect the organization in the future. The
information gathered will allow leadership to proactively respond to external impacts.

Environmental Scanning and Its Characteristics:

Dynamic Process:
Environmental checking isn‟t static. It is a unique interaction and relies upon
evolving circumstances.
Ceaseless Process:
The investigation of the environmental scanning is a constant interaction rather
than being inconsistent. The quickly interchanging environment must be caught
ceaselessly to be on target.
Comprehensive View:
Environmental Scanning centers around the total perspective on the environment,
rather than reviewing it to some extent.
Exploratory Process:
Environmental scanning is an exploratory interaction that continues observing
the environment to draw out the conceivable outcomes and obscure components of
things to come. It focuses on the way that what could occur and not what will occur.
7. Procedure for Environmental Scanning:
Examining:
The most common way of breaking down the environment is to recognise the
variables that might affect the business is known as environmental scanning. It makes the
organisations aware of taking appropriate key decisions before it arrives at a critical
circumstance.

49
Observing:
The information assembled from different sources is used to screen and discover
the patterns and trends in the environment. The fundamental sources of gathering
information are spying, conversing with clients, providers, sellers and workers.
Predicting:
The most common way of assessing future occasions dependent on recently
broken down information is known as environmental predicting, forecasting and
determining.
Evaluation:
The stage in which the environmental elements are surveyed to recognise whether
they give a chance to the business or represent a danger.

Significance of Environmental Scanning:

Achieving goals and objectives:
The targets of an association can‟t be satisfied except if it adjusts to the changes in
the environment. One needs to change the methodologies to fit in the changing requests
of the environment.
Identification of weaknesses and threats:
For an association to develop, it should limit its weaknesses, threats and
distinguish its shortcomings. This can be made conceivable with the assistance of
filtering the environment with better techniques, strategies that can be created.
Forecasting the future:
Environmental changes are regularly capricious. An association can‟t expect
every one of things to come in the future; however, in light of the examination, it can
settle on better essential choices later on. Consequently, environmental investigation
assists with determining the possibilities of the business.
Knowledge of the market:
Every association should know about the continuous changes prevailing in the
market. Assuming it neglects to join vital changes because of evolving requests or
demands, it cannot accomplish its targets.

Zero in on the Customer:

Environmental examination and scanning make an association subtle to the
changing requirements and assumptions for the client.
Identification of opportunities:
With the examination of the current situations in the environment, an association
will actually want to recognise the potential chances and make vital strides.

50
STRATEGIES OF ENVIRONMENTAL SCANNING:

QUEST Analysis:
QUEST analysis represents the Quick Environmental Scanning strategy. This
method is intended to examine the environment rapidly and economically so that
organisations can zero in on basic issues that must be tended to in a limited capacity to
focus.
SWOT Analysis:
SWOT analysis is an abbreviation for Strengths, Weaknesses, Opportunities and
Threats examination of the business environment. Weaknesses and Strengths are
considered as interior elements though Threats and Opportunities are outer variables.
These variables decide the game-plan to guarantee the development of the business.
ETOP Analysis:
ETOP analysis represents the Environmental Threat Opportunity Profile. It
assists an association with investigating the effect of the environment, dependent on
opportunities and dangers.
PEST Analysis:
PEST analysis represents Political, Economic, Social, and Technological
examination of the environment. It manages the macro-environment.
Impediments of Environmental Scanning:
 Over-burdening of data may bring about uncertainty here and there. Henceforth it
isn‟t totally solid.
 It doesn‟t predict the future or take out vulnerabilities. Associations might confront
unforeseen events. Anyway, natural checking should target limiting such dangers to the
business.
 It frequently makes an association mindful and, in this manner, defers decision
making process. It is smarter to have an essential way to deal with examining the
environment and make choices or take actions right on schedule.
 At the point when the associations depend totally on the broken-down data without
information confirmation and exactness, it might prompt deviation in the ideal results.
The following is the need and importance of environmental scanning
1. Identification of strength
Strength of the business firm means capacity of the firm to gain advantage over its
competitors. Analysis of internal business environment helps to identify strength of the
firm. After identifying the strength, the firm must try to consolidate or maximize its
strength by further improvement in its existing plans, policies and resources.
2. Identification of weakness
Weakness of the firm means limitations of the firm. Monitoring internal
environment helps to identify not only the strength but also the weakness of the firm. A
firm may be strong in certain areas but may be weak in some other areas. For further
growth and expansion, the weakness should be identified so as to correct them as soon as
possible.

51
3. Identification of opportunities
Environmental analyses helps to identify the opportunities in the market. The
firm should make every possible effort to grab the opportunities as and when they come.
4. Identification of threat
Business is subject to threat from competitors and various factors. Environmental
analyses help them to identify threat from the external environment. Early identification
of threat is always beneficial as it helps to diffuse off some threat.
5. Optimum use of resources
Proper environmental assessment helps to make optimum utilisation of scare
human, natural and capital resources. Systematic analyses of business environment helps
the firm to reduce wastage and make optimum use of available resources, without
understanding the internal and external environment resources cannot be used in an
effective manner.
6. Survival and growth
Systematic analyses of business environment help the firm to maximise their
strength, minimise the weakness, grab the opportunities and diffuse threats. This enables
the firm to survive and grow in the competitive business world.
7. To plan long-term business strategy
A business organisation has short term and long-term objectives. Proper analyses
of environmental factors help the business firm to frame plans and policies that could
help in easy accomplishment of those organisational objectives. Without undertaking
environmental scanning, the firm cannot develop a strategy for business success.
8. Environmental scanning aids decision-making
Decision-making is a process of selecting the best alternative from among various
available alternatives. An environmental analysis is an extremely important tool in
understanding and decision- making in all situation of the business. Success of the firm
depends upon the precise decision making ability. Study of environmental analyses
enables the firm to select the best option for the success and growth of the firm.
BUSINESS OPPORTUNITY
A business opportunity, also called bizopp, is the chance to take advantage of an
occurrence in the market to begin a business. It involves some kind of favourable
condition which exists in the market.
A business opportunity is what makes some businesses succeed while others fail.
Leaders are successful because they see opportunities before other people spot them,
make plans then build business models to capitalise on that opportunities.
A good example of a business opportunity in the market today is e-books.
Amazon was one of the first companies in the online bookselling business who initiated
an e-book reader that made it possible to read books by means of a digital device that
looks more or less like a tablet pc.

52
Importance of a Business Opportunity
In business, an opportunity is a key to success. Without it, a business cannot
begin, expand, or succeed. The main purpose of an opportunity is to serve as the basis
for any action that results in profit and business growth.
Opportunities allow businesses to create and implement ideas and innovations
and improve their performance. Only those who spot opportunities early can take the
best advantage of them and capitalize on them.
Here are some reasons why a business opportunity is important
 The chance to build a business: A business opportunity can be an existing unsolved
problem in the market or a new problem arising from current trends, which is the chance
to build a business.
 The chance to avoid failure: A business is likely to fail without opportunities. This is
because they are essential for implementing ideas and innovations that can make a
business successful. They allow businesses to take the right decision at the right time.
 The chance to grow: Opportunities allow businesses to create and implement ideas
and innovations. It is also a chance to improve performance by solving existing problems
better, providing a more refined value proposition to the target market, and building a
more efficient business model.
 The chance to maximize profits: A business opportunity involves favourable
conditions that can be used to increase profits. These conditions include but are not
limited to the availability of resources, the existence of market demand, and the presence
of favorable competition. The goal is to find solutions that can potentially maximize
profits while solving problems.

Characteristics of a Good Business Opportunity

Business opportunities are the core of every successful business. They help in
identifying problems and in creating solutions that can potentially help businesses grow.
Here are some characteristics of a good opportunity:
 Clarity: Good opportunities are clear, well defined, and straightforward. They allow
businesses to accurately and completely identify problems and create solutions that can
maximise their potential.
 Relevance: Good opportunities are relevant to the scenario in which they exist. They
provide added value to customers, markets, and industries. This means they do not only
represent potential but also relevance for solving existing problems or creating added
value for others.
 Feasibility: Good opportunities are realistic and feasible. They help businesses
achieve their goals while making them more efficient, productive, and profitable.
 Profitable: A good opportunity is capable of providing returns on investment. It is
able to achieve its objectives while capitalising on the available resources, strategies, and
assets more efficiently.

53
 Scalable: A good opportunity is scalable. This means it can be expanded to a big or a
wide scale. It can extend to various markets and industries while maximising the results
of investments in terms of time, human resources, and money.
Types of Business Opportunities
There are different types of business opportunities, each one serves as the basis for
important decisions that help businesses succeed. Here are some examples:
1. New market opportunity: A new market opportunity involves an untapped market,
which gives businesses the chance to create and implement ideas and innovations
without facing much competition.
2. Untapped resource opportunity: An untapped resource opportunity is a type of
business opportunity that involves underutilised or unexploited resources that can be
used to create added value.
3. Repressed demand opportunity: A repressed demand opportunity capitalises on
existing demands that the current offerings don‟t cater to. For example, Uber capitalised
on a repressed demand for an on-demand cab system in the existing cab industry.
4. Technology opportunity: A technology opportunity is a type of business
opportunity that allows businesses to introduce new technologies that can be used in
existing markets.
5. Competitive opportunity: A competitive opportunity allows businesses to introduce
new products or services that can provide more value than their competitors while
solving the problems of the target market better.
6. Strategic partnership opportunity: A strategic partnership opportunity involves the
chance to collaborate with businesses from complementary industries, allowing them to
access new resources, strengthen their product offerings, and increase their competitive
advantage.

How to Identify a Business Opportunity?

Opportunity identification is an important part of business development and
growth. It allows companies to make the right decisions that will help them achieve their
goals.
The Customer Research Stage
The first step is to research customers and their problems by asking questions
related to the customer‟s needs, goals, and expectations.
This involves collecting, organising, and analysing information about customers‟
behaviour as well as their needs. The past and present trends of the target market must
also be identified to help businesses better understand customer preferences.
The objective is to identify potential business opportunities that can help the
business create value for its customers.
Problem Hypothesis Stage
In this stage, businesses search for problems by identifying issues and concerns
from customer feedback and other sources of market research. The first step is to define
the problem. Once that has been done, businesses need to search for the root cause of the

54
problem and explore possible solutions. The goal is to formulate a well-focused
hypothesis that can be tested with market research.
Product Hypothesis Stage
Businesses should determine what kind of product or service will solve customers‟
problems or address their needs. The product or service should target specific customers
based on the information gathered during the customer research stage.
Market Hypothesis Stage
The market hypothesis stage involves testing certain key assumptions about the
business opportunity with customers to determine the demand for a particular product or
service in the real world, and how it solves problems in the specified market.
It also involves doing in-depth research to identify existing players in the targeted
market, and determining customer expectations for the product or service.
Product Development Stage
Once a business opportunity is confirmed, the next step is to develop a product or
service that will solve the problem. The product or service should be designed and tested
using various methods to ensure its viability and effectiveness. Businesses need to
consider their target market, competitive threats, and business models as they develop
the product or service.
Business Opportunity Examples
Business opportunities are everywhere, and it is important for businesses to
identify and tap into them. For example, Uber found a business opportunity in the
unorganised transportation industry by introducing an on-demand cab system.
There are also many other examples of great business opportunities:
 Airbnb: Airbnb introduced the concept of sharing economy by allowing people to
rent out their homes as an alternative to hotels or motels. This is a perfect example of a
new market opportunity because hotels were the only service providers for this kind of
accommodation before Airbnb came along.
 GoPro: GoPro is a new camera brand that saw an opportunity to introduce a unique
product in the market where smartphone cameras and existing digital cameras were
already popular. It catered to a repressed demand of capturing high-definition videos of
sports activities, something traditional cameras were not capable of doing.
 TikTok: TikTok saw an opportunity in the music and video streaming market by
introducing a unique take that allows users to create 15-second videos set to music. It
found a repressed demand of getting recognised and untapped technology of user-
generated video content.
 Crate and Barrel: Crate and Barrel saw an opportunity to introduce a unique
concept in the furniture industry by selling ready-to-assemble furniture. This is different
from other players in the market who only sold expensive, high-quality pieces of
furniture.
Business Opportunity Vs Business Idea
A business opportunity is different from a business idea; the latter is based on the
former. Business opportunities are identified when companies find issues or problems in

55
existing markets, untapped needs, untapped technologies, customer feedback, market
research and other sources of information.
Business ideas are typically created through creative thinking by entrepreneurs
who try to capitalise on business opportunities by exploring ways to solve certain
problems
Identification of Business Opportunities
An entrepreneur takes the initiative to start the business activities, by exploring
and analyzing or Identification of business opportunities. He also bears the related risks.
The real entrepreneur is not risk centered, rather he is opportunity centered. The
entrepreneurs explore economic and business opportunities and remain ready to take
advantage of those opportunities.
An entrepreneur is a person who foresees the opportunity and tries to explore it
by introducing a new product, a new method of production, a new market, a new source
of raw material, or a new combination of factors of production.
Thus, in terms of Identification of business opportunities, the entrepreneur is a person
who always discovers changes, reacts to that, and takes its advantages, as an
opportunity.
Hence, the possibility of business opportunity in any entrepreneurial venture gets
developed only when it has the possibility of commercial feasibility.
For example, the nature of competition, marketing strategy, price policy future prices in
relation to the quality of the product, size of the market, possibilities of future
development and arrangements for the sale of the product, etc.
Thus, whether any entrepreneurial venture is in the form of a business
opportunity or not may be identified on the basis following two factors.Whether the
demand is in excess of the available existing supply in the market or not.
A reasonable rate of return on investment, which is equal to the general rate of
return and risk premium, in the context of specific business opportunities.
Besides, to substantiate the business opportunities, it is also essential that the
aforesaid factors may be feasible from commercial, financial, technical, production, and
managerial efficiency point of view.
Thus, the following are the objectives of the Identification of business opportunities:
1. Identification of opportunities by an entrepreneur, in the context of probable
industries and to decide his own role, the scope of work, and relationships, in accordance
with the opportunities.
2. To keep watch over the possible market of the commodity or service to be produced.
3. To decide a high-level group of managers, so that entrepreneurial ventures may be
started.
4. To make an assessment of financial resources by making financial forecasts, in the
context of the process if industrial development.
5. To explore the opportunities for possible entry in other areas.
6. To assess the requirements of labor, capital, and materials for the industries.

56
7. To find out the possibilities of short term and long term development in various areas
of the economy.
8. To have the desire for technical knowledge, awareness towards new opportunities,
and acceptance of the changes.
9. To see the possibilities of diverting the available resources towards achieving
the business objectives.
10. To identify those industries, which are not based on local sources, but which may
be economically considered, in view of future requirements.

Factors to Consider in Identifying Business Opportunities

1. Analysis of Internal Demand
Business opportunities may be identified by assessment of internal demand of the
existing and proposed products, as to what will be the possibility of future demand?
Before it, the entrepreneur will have to keep into consideration, the per capita income,
population, and national income.
2. Availability of Raw Materials
Easy availability of raw material also has an important role in selecting the
business opportunities, the reason being that the quantity and level of future production
are decided only by it.
If the raw material is easily available, then not only the production cost is low,
but it also makes the entrepreneur ready to establish the industrial unit.
3. External Assistance
Role of external assistance, like – government, suppliers, investors, and specific
institutions is also important, in Identification of business opportunities, the reason being
that external assistance, support and cooperation are helpful in Identification of
opportunities.
In various areas, governments provide assistance, subsidies, and incentives in the
identification of business possibilities and the establishment of industries.
As a result, the entrepreneur may easily take decisions for the promotion of the industry.
4. Knowledge about Industrial Development
By obtaining detailed knowledge about proposed industrial development from
various sources, the entrepreneur may know, the establishment of which type of industry
and at which place will be profitable, and which not?
Besides, by such knowledge, he can also know, which specific industry has wide
possibilities of development?
5. Internal Sources
The availability of internal sources also has an important role in the identification
of business opportunities.
If the sources of production are regularly available to the entrepreneur, he may
take positive steps for the establishment of the industrial unit.

57
6. Risk in Business Opportunities
Every business involves risk. It goes on increasing or decreasing with the
environment in such conditions, the entrepreneur has to identify, when, and how much
risk involved in the business opportunities? He has also to ascertain, to what extent, the
taking of this may be profitable to him.
7. Performance of Existing Units
The entrepreneur main objectively analyzes the performance of existing units to
identify business opportunities. For that, he will have to analyze products, and product
expansion, capital, profits, employment, assets, export possibilities, etc.
8. Promote Entrepreneurial Activity
The entrepreneur may promote entrepreneurial activity for the establishment of
industries having good potential for exports, by identifying suitable business
opportunities
It is clear that decisions regarding the profitability or otherwise from the
promotion of particular entrepreneur activity, or in which specific areas are Industries,
opportunities for promotion are available may be taken on the basis of study and analysis
of the aforesaid factors.
Challenges of Identification of Business Opportunities
As regards, challenges involved in the promotion of entrepreneur ventures it is
noteworthy that with the beginning of economic liberalization, industries are forced to
comfort with international products on another side, they have also to face the challenge
of keeping production cost Low to face this challenge.
Lakhs of workers have become unemployed in the country after liberalization and
globalization and thousands of industries have been locked, due to not sustaining in the
competition.

Challenges or problems
1. Initial Crisis in Beginning of Business
The crisis which an entrepreneur has to face in the beginning is called the initial
crisis. During this period, when an entrepreneur promotes any entrepreneurial venture,
he feels fully confident that on the basis of his ability and qualities, he will be able to sell
his products or services, by earning profits.
However, it is so complicated entrepreneur activity, because. He produces or
creates new product and service, Introduces a new system of delivery of the existing
products and services, Create new markets for existing products or services, and Creates
a new environment for existing products or services or creates their join possibilities.
Thus, when the entrepreneur is effected by any thought, then he analyses it and
enters into the new environment so that entrepreneurial ventures may be promoted.
2. Promotion of an Entrepreneurial Venture
For the promotion of an entrepreneurial venture, then the entrepreneur has to
perform various activities and functions. So, he works hard to organize the industry

58
3. Financial Challenges
Financial crisis or entrepreneurial capital is also a challenge to the entrepreneur
for promoting an entrepreneurial venture, the reason being that substantial funds or
capital are required for initiating any new venture and that too at the lowest cost.
4. Innovation of New Product
How to present the new product is also a challenge.
What are the Features and Importance of the Product?
5. Unhealthy Competition
Whether the Enterprise will be successful or not is also a challenge, the reason
being that some persons Resort to Healthy competition where is other in the lurch in
unhealthy competitions also, like not to cooperate, to sell products at prices lower than
even the costs, threatening the firm to close, etc.
6. Decision-Making and Leadership
In the end, when the size of the industry or business sufficiently grows, then the
problem also arises with respect to the delegation of decision-making powers and
leadership, etc.
Thus, there are many challenges and problems in the promotion of the
entrepreneurial venture.
For solving them, many issues, like future demand, availability of capital, other sources
of production, possibilities of future profit, etc. are to be considered.
Thereafter, while analyzing the business opportunities, it should be decided, that
what commodities are to be produced, the reason being that the entrepreneurs have
necessarily to safeguard the present of the business, but he has also to make efforts for
making the future, bright.
The specific function of an entrepreneur in any entrepreneurial venture is to make
the business so capable at present, so that it may build its tomorrow.
The entrepreneur has to work in a dynamic economic environment. Hence, the
need is always keeping the business new in the environment of changes and
development.
Besides, an entrepreneur has also taken advantage of the business opportunities,
by identifying them, giving place to new methods in the business, making new research
for business promotion, and by making the search for new markets, etc.
Market Research
Definition
Market research is the process of gathering, analyzing and interpreting
information about the market, products, and services, consumers and competitors to
have a bird‟s-eye view and make a more informed decision. It is considered necessary for
successful business planning.
Business conduct market research for different reasons, for example, looking for
new markets and prospects, testing new products and services, business innovation,
product placement and the industry as a whole.

59
IMPORTANCE OF MARKET RESEARCH
Acquiring new customers and sales is the main focus of every business; market
research ensures both of that. Whether it‟s a sole proprietorship or a large corporation,
market research is equally important for every business. Here are some of the following
reasons why it‟s important
Identify Problem Areas in Business
Market research helps us to look for some new opportunities that our business is
lacking. Once the market research is finished, then it becomes clear to us about our
targeted customers and how we can approach them. There at this point, you‟ll see the
problems and the opportunities to manage those problematic areas. For example, it
would require you to be partnered up with other businesses. Or the new sale location, or
add some product bundle offer.
Minimize Business Risks
Having said earlier that new customers and a steady flow of sales is the main
focus of every business; market research helps you to find those opportunities with
minimum risk involved to achieve your market goal. However, you can minimize the
risk by the number of ways like; test the product or service before launching it into the
market. If your product is failing, then it would answer the questions like why your
customers aren‟t coming back. It would also give you a clear insight of the problem, if
the sale has started dropping, then it would give you the suggestions like lower quality,
problem in the site or distribution channel is taking more time.
Well-informed Business Decisions
When you know your problems and you also know how you can solve them by
using the minimum risk. For instance, who and where your customers are and why they
are dissatisfied; whether to launch a new product or discontinue the old product or
service; or make some improvement in the existing product. In other words, you have all
the necessary ingredients to make a clear business decision.
New Areas for Expansion
One of the major problems that all the business face while advertising is
exactness. They don‟t exactly know which audience to target. Market research tells you
the demographics of your audience, their nationality, their language, and culture. Once
you know your targeted market, now you can target your customers by using the paid
ads tool of social media. For instance, separate ads for students on campus, completely
different ads for single dads, pregnant ladies, and single moms. Market research allows
you to follow a separate approach for each separate niche.
Market Trends
The market research gives you a clear idea about market trends like what
problems people are facing and how you can solve them. The interest of people these
days; whether they are playing video games or watching movies, which niche is more
competitive; people want necessity products or want a luxury product and service.

60
SWOT Analysis
Market research provides you a detailed SWOT analysis like strengths,
weaknesses, opportunities, and threats of business. With the help of internal and external
analysis, you can make a better decision.
PESTLE Analysis
Political, economic, social, technology, legal and environmental are known as the
external factors that can affect your business operations and performance. Market
research provides you a well-detailed PESTLE analysis about the environment in which
you are running your business.
Methods of Market Research
We have been talking about market research; now the question is how we can
perform market research. However, there are two methods of market research, primary
and secondary.
Primary Market Research Methods
As the name implies primary method means that collecting the information by
using the direct and primary source because it involves an in-depth analysis of some
particular problem or an issue. Some of the important primary market research methods
are given below;
Interviews
Either conducting a face to face interview or a telephonic interview; it‟s an open-
ended and two-way process in which the interviewer and the interview can both ask
questions. Now the success of the interview depends on the quality of questions asked by
the researchers. Focus only on those points where you need information, omit rest.
Online Surveys
A form with a list of checkpoints is sent to the audience either via email or direct
message to get the feedback of the people. Some organizations offer rewards after the
online survey, the purpose is to keep the interest level up. Online surveys shouldn‟t be
too lengthy, so the people would leave the form without even finishing and it should be
made interesting.
Focus Groups
It is a very famous method used by businesses to observe views of experts from
different fields; a focus group involves 6 to 10 people. Moderation starts the discussion
and stimulates it from time to time; views, gestures and body language of the people are
observed. Businesses learn which niche to focus on.
Observation
Observation also falls in the category of primary research method, but it doesn‟t
involve a direct connection between the observer and the subject. Bakery is the most
common example; where cameras are installed at different locations, at which product
customer spends more time is observed.

61
Secondary Market Research Methods
The secondary market research method means that information is collected by
using the already existing data. Research reports and other documents similar to this are
common examples of the secondary method. Some of the important methods of
secondary market research are given below
Data available on the Internet
Googling or internet surfing is a very common method of secondary data
collection. Thousands of websites are there online to provide information on almost
every topic. The best thing about this method is that it is free.
Government & Non-government agencies
Government, non-government agencies and small business centers are also a
great source of secondary data collection source; where you just have to pay a certain
price to get the relevant information and data that you require. Data obtained from such
organizations is usually considered authentic and trustworthy.
Commercial information
TV stations, magazines, newspapers, Radio, and journals also fall in the category
of secondary commercial data collection sources. These sources usually have the direct
and first-hand link with the information. Commercial sources have a vast range of data,
businesses, and organizations that want to collection collect data from these sources, and
then they have to be specific about their category.
Types of Market Research
When a business wants to know the behavior and buying pattern of the customer
of their target market, then researchers perform different types of studies and use
different tools to get the required results. Types of market research are as follows;
Primary Research
Primary research means that the researcher is in direct contact with the targeted
customer. Companies usually hire third parties to conduct primary market research for
them. Data collected from primary research could be quantitative (numerical) or
qualitative (non-numerical) depending on the planning and question prepared by the
researcher.
Secondary Research
Secondary research is comprised of outside sources like the chamber of
commerce, government, media, agencies, etc. Information from such sources is usually
published on websites, newspapers, journals, TV channels, radio, etc. We can categories
the secondary sources into three main domains; public source, educational institutions,
and commercial sources.
Quantitative Research
Quantitative market research is a type and method like surveys, focus groups,
observation, interviews, poles, online questioners and phone surveys. As the name
implies that the data collected from the quantitative research is in the form of figures and
numbers.

62
Qualitative Research
Qualitative market research is also like quantitative type and methods like
surveys, focus groups, observation, interviews, poles, online questioners and phone
surveys. But in the qualitative market research, data is collected in the exploratory and
open-ended which can be interpreted later on.
Descriptive Research
In the descriptive type of market research, the focus is to find the accurate and
correct answer about the market problems. The following types of questions are focused,
for instance, how is the consumption of our product? What type of people buying our
product? What exactly are the targeted buyers of our product?
Exploratory Research
In the exploratory type of market research, researchers usually have basic and
clear knowledge about the issue but research is conducted to get a better insight into the
problem. The researcher must be clear about his ideas; irrelevant and impractical ideas
should be avoided.
Causal Research
In the causal type of market research, the relation between cause and effect and
variable is established to observe the changes. If the packaging is changed of a certain
product; then how it will affect the product sale and its durability.

Market Research Process

We live in a very competitive business world where the market keeps on
changing; high sales at one time and zero in the next month. When businesses face such
issues, then market research is performed. However, market research is a step by step
process, it starts with;

Define the problem

First of all, the main focus is to find out the exact problem. Finding the exact
problem is the key to the success of market research.
Develop Market Research Plan
Once the problem is identified, the next step is to develop a plan that how you‟re
going to conduct market research.
Data Collection
Once the plan is laid out for the market research, collect relevant data that is
helping the market research plan and answer the problem defined earlier.
Analyze the Data
When you have sufficient data collection to answer questions; now analyze the
data to see if any pattern is being formed. If it does, then what it means to research.
Present the Data
If you see any patterns being developed, now put on the paper to see it clearly, or
draw a graph or chart to find some relevancy.

63
Take Action
At this stage, you know the answers based on the information available to you. If
your answers address the questions of the stage, then take action and apply the plan.

Marketing Research: Methods and Techniques

The research undertaken in marketing field may be quantitative or qualitative.
The quantitative marketing research attempts to observe statistically the behaviour of
various marketing components.
It is an attempt to figure out the consumer profile relevant to the marketing
problem under study. It tries to find the answers as to what? How? How much? Where?
And When? A consumer buys a product or a service.
It is probing the conscious mind of consumers. On the other hand, qualitative
marketing research tries to find out answers as to why a consumer behaves this way or
that way? It answers why? of a situation by probing the sub-conscious and unconscious
mind. It finds out the causes and the motives for specific consumer behaviour. It is more
popularly known as „motivation research‟ a major form of consumer research.
Quantitative research relies more on direct questioning, quantitative data
collection and, therefore, mathematical analysis. Contrary to this, qualitative research
believes in psychological methods and techniques of measuring the consumer behaviour.
The most common methods and techniques used in marketing research are:
1. Survey.
2. Observation
3. Experimentation.
4. In-depth interviews and
5. Projective techniques.
The first three are methods while the last two are the techniques.
Methods:
1. Survey Method:
Survey methods refer to all methods of obtaining the needed information through
asking the questions to the respondents. This method is, therefore, known as the
„questionnaire‟ method.
Professors Tull D.S. and Hawkins D.I. define survey method as “the systematic
gathering of information from the respondents for the purpose of understanding and/or
predicting some aspects of behaviour of the population of interest”.
Surveys are commonly conducted both in quantitative and qualitative researches.
After having decided about the sampling, questionnaire is designed and the respondents
are contacted to answer these questions asked in the questionnaire. This process of
getting answers is called as interviewing.
In questionnaire research, such interviewing is more direct in that the respondent
knows the purpose of the study and answers to the questions. On the other hand, in
qualitative research, interviewing is more indirect as the respondent does not know the
purpose of study yet answers the questions.

64
Two significant factors affect the effectiveness of a survey method:
1. Wording of questionnaire must be such that desired information can be obtained
accurately and unbiasedly.
2. Ability and willingness of the respondent to give accurate and unbiased information.
There are three major methods of conducting a survey the ways to reach the respondents
for getting the desired research information.
These are:
A. Personal Interview
B. Mail Interview and
C. Telephone Interview.
A. Personal Interview:
Personal interview is the process of communication where face to face contact
between the investigator and the respondent is established. It is the conversation
arranged for the purpose of obtaining views of the respondent on the topic of interest to
the interviewer.
Under this method, the investigator presents the questionnaire in person either at
the residence or at the office of the respondent. Being active participant, he establishes a
close rapport with the respondent and motivates him or her to answer all the questions
satisfactorily.
Merits:
1. It is a superior method:
Personal interview method is superior to mail and telephone interview methods
because, it has two special features of its own.
These are:
(i) Answer is not only on asking,
(ii) Personal observation. That is why, this method is widely used.
2. Maximum information is sought:
Maximum and accurate information can be elicited by the investigator because,
he can explain each question in person and this enables the respondent to answer the
questions only after understanding. So no question is left unanswered.
3. Regulation of interview:
In personal interview, the investigator being an active participant can control the
interview to his advantage and to the convenience of the respondent by directing,
guiding and supervising the respondent. It is he who matches to the needs and moods of
the respondents.
Demerits:
1. It is expensive:
This method works out costly because of varieties of expenses incurred on
sampling, questionnaire, interviewing, recruiting training and controlling investigators,
paying for their services. Above all the time lost is too much. That is 35 per cent to 45
per cent extra time is to be provided for arriving at the total time spent.

65
2. More administrative problems:
Personal interview method involves more administrative problems because of
wider organizational paraphernalia, selection, training and control of personnel both
research and non-research. The greatest problem is that of chasing of widely scattered
investigating staff.
3. Biased information:
The investigators may not get accurate and unbiased information though it is
possible to get maximum information.
It is likely to be biased as the investigator plays more active role in explaining the
questions; he may get answers only to the key questions and the rest he may manage as
per his sweet will caprice.
B. Mail Interview Method:
As the title suggests, the respondents are contacted through post. There is no face
to face contact between the investigator and the respondent. The questionnaire is sent to
the mailing address of the respondent with a request to fill in and return back.
Much care is to be taken while designing the questionnaire as there is no face to
face contact. The questions asked must be answerable quick in terms „Yes‟ or „No‟. The
covering letter must be carefully couched to induce, convince and motivate the
respondent to answer all the questions and return the questionnaire duly filled back to
the investigator.
The cost of return postage is to be borne by the investigator. Some business
houses enclose a gift or a cash payment for having taken the trouble of providing the
relevant information. It is more a goodwill gesture.
Merits:
1. Detailed and accurate information:
The researcher can contact maximum number of persons by sitting at his office. It
is powerful in terms of distance and time covered and saved. The information given is
likely to be unbiased, detailed and accurate as answers are given at the convenience of
the respondent.
2. It is economical:
Though there are unavoidable costs, the -heavy expenses on travelling and
personnel are totally eliminated unlike personal interview. This brings about what is
known as „user surplus‟. Due to wide coverage, the costs are the least.
3. More objectivity:
This is more objective method of data collection in the sense that the
questionnaires are sent to be standardized and self- administered that makes possible
uniformity of interviews making the data collected more comparable. It is free from bias
because, the interviewer is absent.

66
Demerits:
1. Possibility of poor response:
The greatest draw-back of this method is poor response to the questions asked
and the persons responding. There is no guarantee that all the respondents will answer
all the questions. Further, it is not compulsory to answer the questionnaire.
2. It is time consuming:
The researcher will not be able to keep the time schedule for completing his
research programme. Though he puts the deadline for answering the questions, his bitter
experience is that questionnaires reach him only after the due date. It undermines the
value of time-dimension of research work.
3. Incomplete and inaccurate data:
As there is no investigator present, there is no personal enforcement to answer
such and very question. It may so happen that friends and relatives may answer the
questionnaire on behalf of the respondent.
He will not get accurate information on matters like age, income, education,
marital status and the like. This wrong information leads to wrong conclusions.
C. Telephone Interview:
Under telephone interview method, the researcher establishes a contact through
telephone. The investigator will have to be selective and careful while designing the
questionnaire for it cannot be a lengthy type as in case of earlier two methods.
It must be brief, simple, to the point and non-confidential. The special problem of
telephone interview is that of building close rapport with the respondents so that he can
be induced and persuaded to reply satisfactorily.

Merits:
1. It is economical:
It is the speediest method of data collection where up-to-date information is got at
telephone call without waste of time just sitting in the office. Other expenses on
questionnaire, sampling, investigation and office are nil. The only expenditure is on calls
made. The cost per call decreases with the unlimited calls made.
2. Unbiased Data:
Normally respondents are more frank on telephone than in person. They are not
influenced by family members and friends as telephone conversation is considered to be
private affair. The facts heard by the investigation can be recorded and verified, if need
there be.
3. Best method to elicit information from specific group:
When the respondents are belonging to higher socio- economic classes, it is really
very difficult to get personal appointments. It is normally the case with professionals like
doctors, lawyers, consultants, businessmen, architects, executives, professors and the
like.

67
 In such cases, telephone call can command more respect than a door-bell. These
busy persons give interviews provided the time taken is of short duration. Moreover,
these people are more cooperative for they know what research is.
Demerits:
1. It is of limited use:
Telephone interview is limited to the extent of its contacts with the respondents.
Though, telephone interview is gaining ground in western countries because of wide
coverage, it is quite discouraging in country like ours where coverage is as low as 15 % of
total population as against 85 % in advanced nations. Further, all phones are not
working efficiently all the time.
2. Possibility of no reply:
Thinking that the respondent has the telephone facility, still there is no guarantee
that the interviewer gets the reply. It is easier and convenient to say „no‟ on phone than
in person. Many a times the respondent may simply hang up and deny any useful
information.
Further, it is difficult to include and persuade the respondent who has not been
seen by the investigator.
3. Lack of personal observation:
Unlike, personal interview telephone interview does not lend itself to have close
observation of the respondent. No behavioural gestures such as grins, winks, frowns,
raised eye-brows and the like are possible. Again, visual aids are of no avail. Unless
vision phone facility is made available, this continues to the limitation.
2. Observation Method:
Observation implies viewing or noting the act or occurrence. Observation is the
method that places an observer human or machine to watch and record as to what is
taking place.
Here, the observer does not ask the questions to the respondent but observes his
or her actions or behaviour with or without telling the respondent that he or she is being
observed. Many a times the investigator will not get answers for his questions under
other methods; but he gets here without asking the questions.
Thus, observation method works well in lieu of communication. Such an
observation is to be scientific and casual. For instance, if you are to get answer for
question say “What brand of shampoo does a lady use?” Instead of asking the question,
the observer can note her behaviour at the sales counter and determine her choice.
Further, it may be a question of determining the efficiency and the devotion of a
salesman in a store. An observer can measure the same in disguise of a customer.
Observation is mostly done by human-beings as it is more comprehensive though
less accurate, less convenient and uneconomical. Of late, mechanical or electronic
devices are used on the grounds of accuracy, economy and convenience, though of
limited applicability.
These mechanical devices are traffic counting machines, hidden cameras, audio-
meters, eye-cameras, pupitometers, tachistoscopes, psycho-galvanometers and so on.

68
Observation method is commonly and more fruitfully used both in quantitative and
qualitative research.
This method is more objective and accurate than survey method as it eliminates
human element uncontrolled.
The limitations of observation method are:
1. The information that is sought by the observer may not be sufficient as he can observe
only the overt behaviour.
2. It is much costlier than the survey method itself. Further, the experts have not been
able to develop alternative method of observation nor they have been fully utilized. The
techniques developed so far need further refinement for their perfect and fuller use.
3. Experimental Method:
Experimental method of research is the procedure of carrying out the best
possible solution to a given problem on a small scale. The aim is to determine whether
the tentative conclusions reached can be proved in actual conditions.
The actual conditions are ever changing and cannot be controlled by the researcher.
However, continuous experimentation in differing conditions, it may be possible
to isolate the effect of these differing conditions. Professor Tull D.S. and Hawkin D.I.
have defined this method as “the deliberate manipulation of one or more variables by the
experimenter in such a way that its effect upon one or other variables can be measured.”
In marketing area, an experimenter may be interested in measuring the effect of
change in the brand name, price, product design, color, package, copy of the
advertisement and the like on the sale of a product. Such an exercise is known as test-
marketing.
Test-marketing establishes the cause and effect relations and its findings may be
the basis for bringing about change in the product-mix. Let us take the case of colour. If
the experimenter wants to know the best colour of the two proposed toilet soaps, he has
to say, pink and yellow with same coloured packages.
He would select five very popular stores located in the different parts of the state,
giving equal display of the two packages. He would record the actual sales in all the five
stores for each colour and will take that colour for granted that has shown the highest
sales in all the stores. Let us take that pink colour has the upper hand then, it is clue for
him to go in for larger quantities of pink than yellow.
The strength of experimentation lies in the fact that it helps not only in building a
theory but also solving marketing problems as it resembles practical setting. In fact,
decision makers rely on it to a very great extent as it helps them in detecting the real
causes of impediments or troubles for taking marketing actions to plug the gaps.
However, its limitations are:
(a) It is costlier method both for researchers and non- researchers.
(b) The findings may not remain for a very long time because, the researcher will not be
able to control the dynamics of changing consumer needs.

69
 In our case, observed people may not like pink colour. By the time the firm goes
in for larger production of pink cakes, they may prefer yellow or white or even light
green.
TECHNIQUES
1. Depth interviews:
Depth interview is a technique of getting the replies from the respondents in an
atmosphere of freedom and relaxation. It is a form of unstructured research or interview.
It is non-directive interview where the respondent is being urged to talk than mere saying
„yes‟ or „no‟ for a specific question.
The respondents are kept in dark that they are being interviewed and, therefore,
they express or expose themselves without any kind of fear or disapproval, dispute or
admonition.
It is beneath line or beneath the consumer surface interviewing to ask leading
questions to stimulate free and frank discussion of the subject on hand without asking a
standardized list of questions. It is called as depth interview because, the researcher
proves through probing the unconscious mind, feelings, needs, conflicts, fears, motives,
attitudes, habits and taboos.
The standard size of the group varies between 5 to 45 persons. The interview may
be or may not be tape-recorded. It normally lasts for one to three hours. Since depth
interview is unstructured and undirected, the degree of success totally depends on the
competence of or the caliber of the interviewer. It is his ability to make the respondent to
expose to his queries that count the most.
The brighter side of depth interview is that it helps in uncovering the human pre-
dispositions having far reaching impact on his research problem.
The variety and the volume of the information sought are really substantial. This
information reduces the level of uncertainty in decision making.
The limitations are:
(a) Neither it is possible to get really competent interviewers at least did not cost
nor the information collected by them is unbiased.
(b) It is a time consuming affair so much so that it is really difficult to hold on
respondent hours together.
(c) Many a times, the respondent may not expose to the extent the researcher
desires. You may uncover every-thing of his „inner-self except the taboos.
2. Projective techniques:
Projective tests are the tests conducted wherein the respondents are encouraged to
project their feelings, attitudes, impressions, motives, reactions and the like to a third
person or an object. It is that technique which involves stimulating the interviewee to
project himself or herself in an artificial or ambiguous situation. Here, the inner feelings
are made to reveal.
If the researcher ask a respondent as to why he has not yet bought a colour
television set, he may say that he is waiting for a particular latest model. However, the

70
real reason may be his financial difficulty. This hidden feeling or cause is unearthed by
the projective techniques.
The most commonly administered tests of this kind are
1. Word Association Test
2. Sentence Completion Test
3. Thematic Appreciation Test and
4. Paired Picture Test.
Sometimes, Third Person Test is also conducted. Then the other varieties are „role
playing‟ „psycho-drama‟ „graphology‟ and the like.
These tests are discussed in coming pages under the title of Motivation Research.
All these are drawn from clinical psychology and psychiatry. The strength of these tests
lies in the fact they are of great assistance to the researcher in discovering the latent and
factual consumer behaviour.
However, the crucial and delicate tasks involved in testing are conducting the
tests to collect the data on one hand, and analysis and interpretation of the data on the
other.
These warrant high degree of caliber, proven skill and candid diligence on the
part of researcher. Really it is very difficult to get the services of such personnel at the
minimum costs.
TEST MARKETING
Test marketing is a method that aims to explore consumer response to a product
or marketing campaign by making it available on a limited basis to test markets before a
wider release. It's important to note that customers exposed to the product or campaign
may be part of a test group without the customers' knowledge.

Test marketing is primarily used for frequently purchased fast moving consumer
goods. However, the general principles can be applied easily to industrial goods and
consumer durable goods also. The objectives of test marketing are generally four folds.
They are:
1). To obtain the best estimates of sales volume and market share of the new
product.
2). Marketing mix elements like distributor support, advertisement response, and some
sales promotion efforts can be evaluated only in the test marketing.
3). Only opportunity to evaluate the entire marketing strategy.
4). It is like a dress rehearsal, time to streamline manufacturing, selling, and
delivering the product to consumers.
Before getting on to test marketing it is important to decide whether or not to test
market. The trade-off of required investment, the risk of taking the product directly to the
market. The risks could be over estimation of the company's ability to manufacture,
distribute and sell the new product, company's reputation and morale of employees. The
several important factors for consideration are opportunity cost of delaying launch. The
third issue is the reaction of competition and company's exposure to competition. When

71
P&G launched' Ariel Compact', a new detergent product in the market, HLL quickly
learnt and. launched "Surf Ultra".

However, it is important to note that the purpose of test marketing is not to learn
whether consumers will buy and use the product or the interest will dwindle quickly. The
answers for these questions should have been obtained in concept test, product test or
pretest marketing, i.e., well in advance before putting the product for test marketing.

The basic reason why test marketing is flourishing is the belief that results are obtained
under realistic conditions and can, therefore, be generalized. There is also a belief that
test marketing is the only tool that comes close to predicting ROI.

The most notable advantages of test marketing are:

a) marketers can pretest alternative marketing strategies,

b) the firm may get valuable clues to various market segments of the new product and its
distribution management,
c) besides identifying sales potential of a new product, it highlights the sources of sales,
d) it brings out all the unsuspected product faults, difficulties and problems in time for
them to be taken care of, and
e) it exposes the ideas and concepts of marketing planners and developers to the
reality.
At the same time, the most obvious disadvantages of test marketing are ;
a) it is time consuming and delays the start
b) it is costly and the value of additional information may be nil,
c) competitors may deliberately disrupt and tangle the results,
d) it may be exploited by the competition to strengthen their products and position, and
e) if not done properly or rushed through, the results may prove to be suicidal.
However, not all products are suitable for test marketing. The nature of product is
also a factor in testing decision. Modifications, for example, don't require test marketing.
Also, the products with expected low sales volume.

In India, test marketing may be used more frequently for consumer products than
forindustrial ones, as most of the industrial products are highly customized and the firms
can obtain new-product feedback by user-to-user sampling - a more personalized and
informal way.

The decision to test market or not also depends upon the degree of perceived risk
and estimates of comparative costs. As a generalization, test marketing is desirable,
when risk is high and costs of a new product introduction are large. When opposite
conditions prevail, there is less reason for test market*. For example, industries such as
autos and steel have high investment needs regardless of production volume, then, what
is to be gained from test marketing? Test marketing is really useful when it can help
defer substantial investments until sales can be forecast with greater assurance.

72
 That is to say, the most compelling reason for test marketing should be risk
reduction. But, not just the monetary risk A national failure is very much capable, of
ruining the channel relationships, lowering the morale of the sales force; and reducing
the confidence of investors.

At the same time, test marketing should also identify ways to improve profit. A
carefully structured test marketing can identify how to improve product, price placement
and promotion. The channel relationships and production facilities can be put to acid
test. Things can go wrong, but test marketing helps them to be corrected before full-scale
lau

Summary – Test Marketing

Test marketing is expensive and time-consuming process. Quantitative model

based new product evaluation models have been developed to judge the product
acceptance and suggest modifications before test marketing. There are several models,
like ASSESSOR, BASES, NEWS, TRACKER etc. for this purpose. This group of
models is based on simulated marketing experiments. These models are called pretest
marketing models. Important new product decision taken based on PTM is whether to
go to market directly, or through test markets. The second set of decisions is related to
product modifications based on the diagnostic information generated during the
simulated test markets. However, certain variables can not be evaluated in PTM also,
like distribution response, and sales promotion impact etc. To evaluate these variables
invariably marketers use test markets.

DELPHI METHOD

The Delphi method, also known as the estimate-talk-estimate technique (ETE), is

a systematic and qualitative method of forecasting by collecting opinions from a group of
experts through several rounds of questions. The Delphi method relies on experts who
are knowledgeable about a certain topic so they can forecast the outcome of future
scenarios, predict the likelihood of an event, or reach consensus about a particular topic.

The Delphi method or Delphi technique ; also known as Estimate-Talk-

Estimate or ETE) is a structured communication technique or method, originally
developed as a systematic, interactive forecasting method which relies on a panel of
experts. The technique can also be adapted for use in face-to-face meetings, and is then
called mini-Delphi. Delphi has been widely used for business forecasting and has certain
advantages over another structured forecasting approach, prediction markets.
Delphi is based on the principle that forecasts (or decisions) from a structured
group of individuals are more accurate than those from unstructured groups. The experts
answer questionnaires in two or more rounds. After each round, a facilitator or change
agent provides an anonymised summary of the experts' forecasts from the previous
round as well as the reasons they provided for their judgments. Thus, experts are
73
encouraged to revise their earlier answers in light of the replies of other members of their
panel. It is believed that during this process the range of the answers will decrease and
the group will converge towards the "correct" answer. Finally, the process is stopped
after a predefined stop criterion (e.g., number of rounds, achievement of consensus,
stability of results), and the mean or median scores of the final rounds determine the
results.
The name Delphi derives from the Oracle of Delphi, although the authors of the
method were unhappy with the oracular connotation of the name, "smacking a little of
the occult". The Delphi method assumes that group judgments are more valid than
individual judgments.
The Delphi method was developed at the beginning of the Cold War to forecast
the impact of technology on warfare. In 1944, General Henry H. Arnold ordered the
creation of the report for the U.S. Army Air Corps on the future technological
capabilities that might be used by the military.
Different approaches were tried, but the shortcomings of
traditional forecasting methods, such as theoretical approach, trend extrapolation,
quickly became apparent in areas where precise scientific laws have not been established
yet. To combat these shortcomings, the Delphi method was developed by Project
RAND during the 1950-1960s (1959) by Olaf Helmer, Norman Dalkey, and Nicholas
Rescher. It has been used ever since, together with various modifications and
reformulations, such as the Imen-Delphi procedure.
Experts were asked to give their opinion on the probability, frequency, and
intensity of possible enemy attacks. Other experts could anonymously give feedback.
This process was repeated several times until a consensus emerged.
A research protocol explaining the rigorous approach to applying the Delphi
method were originally published in the BMJ Open in 2015. This research protocol is
generally used and cited now by any research applying the Delphi method as it is the first
time a clear protocol has been described for the application of the methodology in
practice.
In 2021, a cross-disciplinary study by Beiderbeck et al. focused on new directions
and advancements of the Delphi method, including Real-time Delphi formats. The
authors provide a methodological toolbox for designing Delphi surveys including among
others sentiment analyses of the field of psychology.

Understanding the Delphi Method

The Delphi method consists of several rounds of written questionnaires that allow
experts to give their opinions. After the experts answer each round of questionnaires, the
facilitator collects all the answers and hands out a summary report of the answers to each
expert. Then, the experts review the summary report and either agree or disagree with
the other experts‟ answers.
74
 The experts then fill out another questionnaire that gives them the opportunity to
provide updated opinions based on what they understand from the summary report. The
Delphi method becomes complete when a consensus of forecasts is achieved.

Delphi Method Process

1. Identify the issue and objective
It is important to define the issue one can trying to solve and what they want to
achieve by using the Delphi method. Make sure that one should know what they are
trying to forecast.
2. Choose a group of experts and a facilitator
The experts can be individuals who are internal or external to the organization.
The facilitator should take a neutral position and be someone with experience with
research and data collection.
3. Round one questionnaire
The facilitator provides the first questionnaire for the experts. The type of
questions in round one are usually open-ended, as it allows experts to brainstorm their
ideas. The facilitator collects all the answers from the questionnaire and hands out a
summary report of answers to the experts. In the summary report, the experts‟ identities
remain anonymous to encourage them to state their opinions freely.

4. Round two questionnaire

The second questionnaire should be created by analyzing the answers that,
observe from the first round. Identify any similarities between answers and eliminate
irrelevant content, so the second questionnaire can go in the direction where there is
consensus within the experts.
When the experts answer the second questionnaire, their opinions may remain
the same, or they may change their opinions after reading the summary report from the
first round and understanding the other experts‟ opinions. After the completion of the
second questionnaire, the facilitator hands out a second summary report of answers to
the experts.
75
5. Round three questionnaire
Proceed to the third round with the same idea as the second round. The third
questionnaire should be created by analyzing answers from the second questionnaire.
The experts will answer the third questionnaire based on their opinions from the
summary report of answers in the second round.
The process may continue to go through additional rounds of questionnaires or
choose to stop here if the experts feel like they reached enough consents between the
experts, and all their forecasts agree with each other.
Practical Applications of Delphi method
The Delphi method was initially used to forecast trends and outcomes in the
fields of science and technology. For example, it‟s been used to predict trends in
aerospace, automation, broadband connections, and the use of technology in schools.
Additionally, it‟s been used to forecast outcomes related to the economy, education,
healthcare, and public policy. It is also useful in business situations, helping forecast
sales with 96%-97% accuracy compared to actual sales numbers. As a result, the Delphi
method can be used as a technique to predict the success of business events.

DESK RESEARCH
Desk research is a type of research that is based on the material published in
reports and similar documents that are available in public libraries, websites, data
obtained from surveys already carried out, etc. Some organizations also store data that
can be used for research purposes.
Definition
Desk research can be defined as a type of market research where the information
about the topic in research is available in printed form or published on the internet, in
newspapers, magazines, and government reports is collected and analyzed.
Desk research is basically involved in collecting data from existing resources
hence it is often considered a low cost technique as compared to field research, as the
main cost is involved in executive‟s time, telephone charges and directories. However, it
could also be a complete waste of time and money if the researcher does not have the
proper knowledge of how the research is performed.
Desk research is very effective and can be conducted in starting phase of market
research as it is quite quick and cheap and most of the basic information could be easily
fetched which can be used as benchmark in the research process.
Also known as Secondary Research, it can aid the researchers in understanding a
particular market or industry in order to ask intelligent questions during interviews.
In Competitive Analysis, Desk Research is also used to map out potential sources
of information such as industry associations, former and current employees of major
players, industry experts and regulators. It can also identify and collect potential
respondents‟ contact information.

76
There are basically two types of desk research techniques:
1. Internal Desk Research - Internal desk research can be treated as the most reasonable
starting point of research for any organization. Much Information could be generated
internally within the organization as a course of normal process. Account related
information which indicates what type of products are sold, in how much quantity and
at what cost, sold to which type of customers including their geographical location and
so on.
The main advantage here in performing internal desk research is that it involves internal
and existing organizational resources to organize the collected data in such a way that it
is not only efficient but also usable. Internal desk research is comparatively very cheap
and effective as internal recourses are deputed and the expenditure in getting data from
outside is less.
2. External Desk Research - External Desk Research involves research done outside the
organizational boundaries and collecting relevant information. These outside resources
are described below:
a. Online Desk Research - There is incredible amount of data available online on
internet. It‟s important for organization to be information specific while fetching out this
information as there are billions of pages available on internet.
There could be two approaches for digging out the relevant information from internet,
one is directly browsing the specific information from industrial, marketing or business
sites and extracting the information out of these sites. Secondly, using the various search
engines like www.google.com, www.yahoo.com, www.infoseek.go.com,
www.altavista.com etc, for modulated searching.
The important aspect here is to refine the searching techniques in such a way that
results are promising and relevant. For this it is necessary that the researcher should
know the importance of the research and follow the guideline intellectually to reduce the
efforts made and time consumed in searching.
b. Government published data - Government usually publishes a great extent of data
online that can be used in the research process. This data is related to social, financial
and economical aspects. The government websites are mostly free to access and contains
most prominent information. Thus, this could be the cheapest medium of gathering the
information.
c. Customer desk research - One of the best and most prominent ways of extracting
information for research is directly communicating with existing or prospect customer.
Customers are the one who are considered the most informed as they are actually using
products and services and are aware of the current market trends more than any other.
Hence the feedback and information provided by customers is the most accurate and
useful data which can be used most effectively in the further process of research.

77
Scope of desk research
 It enables managers to make better-informed decisions. Secondary research helps
managers to understand consumer needs better. It thus aids them in creating a more
impactful marketing plan. It allows for more informed strategizing and decision-making.
The process thus increases the chance of success of a company‟s marketing efforts.
 It helps managers to identify new opportunities. It also helps them to identify
existing markets. They can use it to segment and analyze the market and competition.
Secondary research can help with product positioning, competitive analysis and with
new product development.
 It gives managers more perspectives. Secondary research material is available to the
public. Many people review the information. Government material, the internet, and
libraries are all excellent sources for secondary research. The data is extensive and may
help to cover several issues.
 It helps companies save money. Researchers don‟t have to go through the expense of
designing and implementing a study. Secondary research reexamines data collected
earlier. Thus, it is cheaper to compile than primary methods. The challenge with reusing
data is that it might not be in the form that the client or the market researcher needs.
 It helps companies save time. It doesn‟t take long to find a credible source with
factual information. It‟s easy to find reports compiled by an industry leader or
government agency. A researcher can find scholarly articles and a host of other resources
on the internet. Companies should consider sources that have offered their research for
public use.
 It helps provide context. Many firms don‟t consider what their focus should be when
it comes to market research. These companies thus need to do some introspection. This
is one reason why some primary market research companies offer secondary analysis. It
is more cost-effective and faster. It also helps clients to build the framework for their
primary research efforts.

Advantages of desk research

Desk research is one of the essential market research that many organizations opt
to learn about their investment. The following are the advantages of conducting desk
research.
1. Inexpensive
The first benefit of conducting desk research is that it costs almost nothing. You
need to have a desktop and internet connection to perform this type of research. If you
are new in the business world and want to start your business from scratch, then it is
understood that you are low on budget to conduct primary research.
Therefore, secondary research is the best option for you to understand the market
segment you want to enter and the demand for the product in the market.
2. Helpful in making well-informed decisions
Marketing plays an essential role in the success of every business. A company
spends a considerable amount of money to market their product. A manager can make

78
better decisions when they understand the field better. The desk research allows
managers to understand the demands and needs of consumers. Thus, they can create
effective marketing plans for their products and services.
3. Helpful in finding new opportunities
Through desk research, a manager can learn about the business opportunities
available in the market. They can analyze the competition in the market and can position
their product in such a way so that they can increase their market share.
4. It takes less time to conduct
Secondary research can be undertaken in comparatively less time than the
primary research. With the help of technology and using public sources, the information
can be collected in very little time.
5. Helpful in focusing the research
Many times, managers face the problem of having one focused research topic. In such a
scenario, conducting primary research will be a waste of time and a waste of resources.
The companies can either hire experts in conducting secondary research or use the
services of third-party organizations that help you in conducting the secondary research.

Disadvantages of desk research

1. Unreliability of data
Relying on the data collected through desk research is a little risky. The data that
you are basing your research on can be outdated as government organizations don‟t
update their data regularly. Their statistics and database are updated once or twice a
year.
2. Difficult to find specific data
Another disadvantage of desk research is that you can‟t find accurate data for
your research topic. Secondary research is useful to establish an understanding of the
research topic, but reaching conclusions only based on the desk research outcome is not
advisable.
3. No control over the participants and the methods of research
In secondary research, the data you collect or analyze is based on the research
conducted by others. Therefore, as a researcher, you cannot control the research
participants and the methods used by them.

Experimental research - Meaning

Experimental research, often considered to be the “gold standard” in research
designs, is one of the most rigorous of all research designs. In this design, one or more
independent variables are manipulated by the researcher
Experimental method is considered to be the most scientific and objective method
for studding behavior. It is observation under controlled conditions. In this method the
investigator tries to study the cause and effect relationships regarding human behavior by
performing experiments.

79
 A common example of experimental research is laboratory blood tests to
determine the causes of a patient's health condition. In these tests, the results obtained
from the patient's samples are compared with constant variables, which indicate the
range of normal values.
Experimental is a type of quantitative research. It is based on a control protocol,
the presence of variables, the manipulation of said variables, and the observation of
quantifiable results. According to its purposes, its design can be pre-experimental, truly
experimental, or quasi-experimental.
Experimental research is used when documentary information is not available to
explain the object of study or when the available information must be verified. It is also
used when time is decisive to understand the relationship of cause and effect in a
phenomenon.
It has application in the natural sciences, in the applied sciences, and in certain
social sciences, such as psychology, education, and sociology, among others.
There are two types of variables. Independent variable and depend variable.

Advantages of Experimental Research

1. It provides researchers with a high level of control.
By being able to isolate specific variables, it becomes possible to determine if a
potential outcome is viable. Each variable can be controlled on its own or in different
combinations to study what possible outcomes are available for a product, theory, or
idea as well. This provides a tremendous advantage in an ability to find accurate results.
2. There is no limit to the subject matter or industry involved.
Experimental research is not limited to a specific industry or type of idea. It can
be used in a wide variety of situations. Teachers might use experimental research to
determine if a new method of teaching or a new curriculum is better than an older
system. Pharmaceutical companies use experimental research to determine the viability
of a new product.
3. Experimental research provides conclusions that are specific.
Because experimental research provides such a high level of control, it can
produce results that are specific and relevant with consistency. It is possible to determine
success or failure, making it possible to understand the validity of a product, theory, or
idea in a much shorter amount of time compared to other verification methods. You
know the outcome of the research because you bring the variable to its conclusion.
4. The results of experimental research can be duplicated.
Experimental research is straightforward, basic form of research that allows for its
duplication when the same variables are controlled by others. This helps to promote the
validity of a concept for products, ideas, and theories. This allows anyone to be able to
check and verify published results, which often allows for better results to be achieved,
because the exact steps can produce the exact results.
5. Natural settings can be replicated with faster speeds.
When conducting research within a laboratory environment, it becomes possible
to replicate conditions that could take a long time so that the variables can be tested
80
appropriately. This allows researchers to have a greater control of the extraneous
variables which may exist as well, limiting the unpredictability of nature as each variable
is being carefully studied.
6. Experimental research allows cause and effect to be determined.
The manipulation of variables allows for researchers to be able to look at various
cause-and effect relationships that a product, theory, or idea can produce. It is a process
which allows researchers to dig deeper into what is possible, showing how the various
variable relationships can provide specific benefits. In return, a greater understanding of
the specifics within the research can be understood, even if an understanding of why that
relationship is present isn‟t presented to the researcher.
7. It can be combined with other research methods.
This allows experimental research to be able to provide the scientific rigor that
may be needed for the results to stand on their own. It provides the possibility of
determining what may be best for a specific demographic or population while also
offering a better transference than anecdotal research can typically provide.
Limitations of Experimental Research
1. Results are highly subjective due to the possibility of human error.
Because experimental research requires specific levels of variable control, it is at a
high risk of experiencing human error at some point during the research. Any error,
whether it is systemic or random, can reveal information about the other variables and
that would eliminate the validity of the experiment and research being conducted.
2. Experimental research can create situations that are not realistic.
The variables of a product, theory, or idea are under such tight controls that the
data being produced can be corrupted or inaccurate, but still seem like it is authentic.
This can work in two negative ways for the researcher. First, the variables can be
controlled in such a way that it skews the data toward a favorable or desired result.
Secondly, the data can be corrupted to seem like it is positive, but because the real-life
environment is so different from the controlled environment, the positive results could
never be achieved outside of the experimental research.
3. It is a time-consuming process.
For it to be done properly, experimental research must isolate each variable and
conduct testing on it. Then combinations of variables must also be considered. This
process can be lengthy and require a large amount of financial and personnel resources.
Those costs may never be offset by consumer sales if the product or idea never makes it
to market. If what is being tested is a theory, it can lead to a false sense of validity that
may change how others approach their own research.
4. There may be ethical or practical problems with variable control.
It might seem like a good idea to test new pharmaceuticals on animals before
humans to see if they will work, but what happens if the animal dies because of the
experimental research? or what about human trials that fail and cause injury or death?
Experimental research might be effective, but sometimes the approach has ethical or

81
practical complications that cannot be ignored. Sometimes there are variables that
cannot be manipulated as it should be so that results can be obtained.
5. Experimental research does not provide an actual explanation.
Experimental research is an opportunity to answer a Yes or No question. It will
either show you that it will work or it will not work as intended. One could argue that
partial results could be achieved, but that would still fit into the “No” category because
the desired results were not fully achieved. The answer is nice to have, but there is no
explanation as to how you got to that answer. Experimental research is unable to answer
the question of “Why” when looking at outcomes.
6. Extraneous variables cannot always be controlled.
Although laboratory settings can control extraneous variables, natural
environments provide certain challenges. Some studies need to be completed in a natural
setting to be accurate. It may not always be possible to control the extraneous variables
because of the unpredictability of Mother Nature. Even if the variables are controlled,
the outcome may ensure internal validity, but do so at the expense of external validity.
Either way, applying the results to the general population can be quite challenging in
either scenario.
7. Participants can be influenced by their current situation.
Human error isn‟t just confined to the researchers. Participants in an
experimental research study can also be influenced by extraneous variables. There could
be something in the environment, such an allergy, that creates a distraction. In a
conversation with a researcher, there may be a physical attraction that changes the
responses of the participant. Even internal triggers, such as a fear of enclosed spaces,
could influence the results that are obtained. It is also very common for participants to
“go along” with what they think a researcher wants to see instead of providing an honest
response.
8. Manipulating variables isn’t necessarily an objective standpoint.
For research to be effective, it must be objective. Being able to manipulate
variables reduces that objectivity. Although there are benefits to observing the
consequences of such manipulation, those benefits may not provide realistic results that
can be used in the future. Taking a sample is reflective of that sample and the results may
not translate over to the general population.
9. Human responses in experimental research can be difficult to measure.
There are many pressures that can be placed on people, from political to personal,
and everything in-between. Different life experiences can cause people to react to the
same situation in different ways. Not only does this mean that groups may not be
comparable in experimental research, but it also makes it difficult to measure the human
responses that are obtained or observed.
The advantages and disadvantages of experimental research show that it is a
useful system to use, but it must be tightly controlled in order to be beneficial. It
produces results that can be replicated, but it can also be easily influenced by internal or
external influences that may alter the outcomes being achieved. By taking these key

82
points into account, it will become possible to see if this research process is appropriate
for the next product, theory, or idea.

83