Question

Please answer the following questions:

1. Explain when marketing research should be conducted? Discuss the growing importance of scanner-based research (5 points)
2. During recession what pricing strategies would you consider using to gain or maintain product/market share? (5 points)

Answer 1

ANS. 1. Marketing research is gathering information about a product, its competitors and any other data that refers to the product's manufacture or sale. While market research is not a time sensitive activity to be performed on set yearly dates, it is an important aspect of a business. The frequency in which it is conducted varies according to a business's needs. Some businesses believe the research to be crucial and consider continual market research a necessity, while others conduct market research only when they start a new business, expand a product, have a product issue or need to introduce a new product to their line.

1. Start-Up

The data compiled in a market analysis helps a business make informed decisions on the types of products, and services it needs to market and how that marketing should be performed. Market research demonstrates the viability and profitability of a business. Initial market research informs an owner of other competing products, their pricing, quality and offers. This information allows a new business to capitalize in areas where the competitor's product is lacking or deficient, by choosing products, product names, and packaging that appeals to the demographics of its potential customers.

2. Follow Up

Following up on the initial market research of a launched product allows a business to develop and improve the service or product based on sales and market research data. For instance, a company that launched a new product the previous year may want to conduct market research again to collect data on how well the product is received, its attractiveness to consumers and the way it is displayed. This information can help a business develop better presentation, delivery, pricing structure and sales promotion for the product. Additional periodical research allows a business to develop and improve all aspects of its service, market and product presentations.

3. New Product Introductions

As a company grows, so does its product lines. But the introduction of new products requires additional market research. This research helps a company identify its customers' additional needs and create products or services that meet these needs while complementing the company's original product. Conducting market research at this point can identify factors like the number of repeat clients, first-time buyers and the demographics the company sells to. This type of information allows the company to make better new-product cost projections, identify product packaging that is attractive to its customers and make better promotional decisions.

4. Continual Research

Some companies consider ongoing market research to be crucial to the success of their business. With new technologies, this ongoing research doesn't always require large amounts of funding. Some business owners simply use existing statistics, create blogs, websites and email to get customer feedback and needed market research information. This continual market research allows a company to track sales, spot product or service issues, determine its market share and collect other relevant information pertaining to the sale of its products.

5. Set realistic targets for your business

Now that you are armed with information about your target customers and existing customers, you can then use this data to set achievable and realistic goals for continuous improvement as well as business growth.

ANS. 2. The days of a recession are way behind us now but it certainly does no harm to be prepared in case the economy becomes rather less stable, particularly, for example, during this Brexit negotiating period – and beyond.

During a downturn, when your sales are wobbling, what's the best way to handle the situation? Do you instinctively cut prices to keep your customers satisfied in the short term?

Certainly, a price cut can quickly boost sales but pricing experts agree that such a knee-jerk reaction may not be the best pricing strategy. It can signal to customers that you're easy prey for additional discounting - and it may harm your brand's image when better times return.

"Pricing decisions should not be viewed as Band-Aid solutions for bleeding income statements",Rather, pricing decisions should be part of a long-term strategy for fiscal fitness. Price cuts not backed up by cost reductions often lead to competitive counterattacks, which will definitely erode your profitability.

There are strategies (other than pricing):-

a) you can trim production levels

b) postpone non-essential expansion plans,

c) cut all non-essential costs wherever possible.

Use A Value-Based Pricing Strategy

It makes sense to change the basis for your pricing. Most pricing experts believe that pricing based on value (the economic or psychological benefits delivered by your product or service) is much more effective than a competitor, cost, or customer-driven pricing strategies.

Be aware however that the basis for customer value can shift when the economic climate changes. When times are good, customers often place a premium on your maintaining production capacity to ensure timely delivery of their orders. In contrast, during a recession, logistical services may be deemed more valuable.