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Q1. Is there any benefit if we survey the market or conduct a macro
analysis before finalizing the product? (5 marks)
Yes it is beneficial to survey the market or conduct a macro analysis before finalizing the Product
because purpose of the Macro Environment Analysis is to identify possible opportunities and
threats. Research is useful for improving marketing decisions and for understanding
the marketing phenomenon, in any marketing situation. It is especially useful for the
marketing of products and services because it helps to will identify trends such as changes
in personal disposable income, interest rates, inflation and unemployment rates ( Economic
Trends). It ll guide about changes in the position politicians take on issues (Political Trends). As
well as will identify changes in the application of technology (Technological Trends). It will
identify trends in societies beliefs, behaviors, values and norms. Such as the number of part time
workers, attitudes towards global warming, make up of the family structure(Social/Cultural
Trends). It ll also identify trends in population growth at relevant ages (Demographic Trends)
Q2. On which bases we divide market in to distinct subsets? (5 marks)
we divide a potential market into distinct and identifiable subsets and where we
select one or more of those which appear to have sufficient commonality and
economic value and which can be addressed with viable marketing strategies
1. Customer Related: demographic, geographic, psychographic
2. Situational - includes buying behaviour
This includes following further:
e.Loyalty status (brand loyalty)
Q3. With the same business setup, what is cheapest and easiest way to go
international? (5 marks)
Launching a World Wide Web Site
Perhaps the simplest and least expensive way for a small company to launch a global
business effort is to create a Web site. The Web gives businesses of any size
tremendous marketing potential all over the globe. With a well-designed Web site,a
small company can extend its reach to customers anywhere in the world-and without
breaking the budget! A company's Web site is available to anyone anywhere in the
world and provides exposure 24 hours a day to its products or services seven days a
week. A well-designed Web site can boost sales from international customers;
however, a poorly designed site can dissuade or even insult foreign customers.
Relying on Trade Intermediaries
Another relatively easy way to break into international markets is by using a trade
intermediary. Trade intermediaries are domestic agencies that serve as distributors in
foreign countries for domestic companies of all sizes.
Q1. Is there any benefit if we survey the market or conduct a macro analysis before finalizing the product? (5 marks)
A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. However, changes in the external environment also create new opportunities and the letters sometimes are rearranged to construct the more optimistic term of STEP analysis.
Many macro-environmental factors are country-specific and a PEST analysis will need to be performed for all countries of interest. The following are examples of some of the factors that might be considered in a PEST analysis.
The number of macro-environmental factors is virtually unlimited. In practice, the firm must prioritize and monitor those factors that influence its industry. Even so, it may be difficult to forecast future trends with an acceptable level of accuracy. In this regard, the firm may turn to scenario planning techniques to deal with high levels of uncertainty in important macro-environmental variables.
PEST analysis is concerned with the key external environmental influences on a business.
The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business.
Identifying PEST influences is a useful way of summarising the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences.
The table below lists some possible factors that could indicate important environmental influences for a business under the PEST headings:
Political / Legal
Environmental regulation and protection
Economic growth (overall; by industry sector)
Income distribution (change in distribution of disposable income;
Government spending on research
Taxation (corporate; consumer)
Monetary policy (interest rates)
Demographics (age structure of the population; gender; family size and composition; changing nature of occupations)
Government and industry focus on technological effort
International trade regulation
Government spending (overall level; specific spending priorities)
Labour / social mobility
New discoveries and development
Policy towards unemployment (minimum wage, unemployment benefits, grants)
Lifestyle changes (e.g. Home working, single households)
Speed of technology transfer
Taxation (impact on consumer disposable income, incentives to invest in capital equipment, corporation tax rates)
Attitudes to work and leisure
Rates of technological obsolescence
Government organisation / attitude
Exchange rates (effects on demand by overseas customers; effect on cost of imported components)
Energy use and costs
Inflation (effect on costs and selling prices)
Fashions and fads
Changes in material sciences
Stage of the business cycle (effect on short-term business performance)
Health & welfare
Impact of changes in Information technology
Economic "mood" - consumer confidence
Living conditions (housing, amenities, pollution)
Increasing productivity and performance to grow your business doesn’t just happen, and it certainly doesn’t happen overnight. Market research and benchmarking will be vital tools to capitalise on opportunities and adopt best practice techniques.
Long gone is the industrial age when companies had little concept of, or interest in, market or consumer preferences. Today, in what IBISWorld chairman Phil Ruthven refers to as the ‘infotronics’ age—driven by information and electronics—companies are forward planning from the outside–in, rather than the inside–out, giving rise to the need to engage in market research on an economic, industry, and consumer level.
Market intelligence—the result of the research—is now crucial to run a successful, innovative, forward-thinking business in the new age.
This year, Australian business will spend about $900 million on market research, says Ruthven, and this will grow steadily over the next five years.
Nicole Donegan, co-director of market research firm StrategyCo, says there are two main reasons why businesses need to do market research. “It could be because they’re thinking of implementing a new product or service, and before they make an investment in that new product or service they’ll determine if there is a need or market for it. Or, they could be looking to improve their business. We do a lot of work with business-to-business clients and we get them to rate the service they’re getting and identify where improvements can be made.”
Market research can then be specifically targeted at one or a number of environments depending on the objectives, such as the industry or sector, the supply chain, customers, government, and the economy. Accessing the information required will then come under two key types of research: qualitative and quantitative.
Qualitative research involves gauging the opinion of customers, for example, and is often conducted via face-to-face or phone interviews, group discussion panels, and so on. “It is an intense form of inquiry, which is based on obtaining an in-depth understanding and a thorough examination of key areas among key target groups,” explains Donegan.
Quantitative research is more about measuring the size or growth of a market or how much market share a particular product or company has. Quantitative research should consist of a large number of respondents from the target group being asked to complete a survey, for example. “This stage is essentially seeking to verify and explore key findings/concepts and themes determined in the qualitative phase. It is the stage that provides the statistical validation for theories and findings,” Donegan adds.
Market research doesn’t have to break your budget. In many ways, with so much information available these days via electronic means, research can be conducted by the business owner or manager. However, ensuring that you obtain the most accurate and insightful information is crucial to reaching your goals for doing it in the first place.
Ruthven breaks down the following types of external information sources available:
* industry associations
* technical information from the likes of analysts and testing authorities
* management consultants
* market research (qualitative and quantitative methods)
* public relations
* personnel consulting
* online database companies, such as IBISWorld
* world wide web—search engines, chat rooms, online discussion forums, books/magazines, news sources
To avoid going into information overload, it’s important that business owners have clear objectives for doing the research, and ensure that their information sources are accurate and will deliver the outcomes (results) required.
This is where Donegan believes professional market research firms can be most valuable. “We always say there’s two choices: they can do it themselves and the benefit is there’s a lower cost. The advantages of outsourcing, however, are that people tend to be more open and honest if they know they’re [reporting] to a third party. When we do it, we always say the results will be anonymous.
“The advantages are also in the way the questions are structured and our ability to decipher the results and present them. If they have a researcher in-house with experience, they can do it but sometimes the honesty and openness is impaired if they do it that way.”
The business owner can then be as little or as much involved in the research process as they want to be, she adds. “It depends on how they want to handle it. We’ll talk to them from the outset and say, ‘what do you want to achieve out of it?’ That’s the key thing—why are you doing this? Is it to improve business, to change the way partners behave, is it to introduce new products? If we know that at the outset we’ll work out how to structure [the research], we’ll work out the project plan with them, what we need to do and what we need from them, and how involved they want to be. Then we’ll implement it.”
It’s important, then, to find a market research firm that is able work with your needs and objectives. Some may specialise in certain industries or sectors, some may focus on consumer research, and all will use varying research methods. “Talk to a few different people and make sure you’re talking to someone senior in the organisation,” advises Donegan. “Make sure the research company understands your business because it’s really important for them to be able to understand what you want to get out of it.
“We get a lot of our work through recommendation, so network and ask colleagues who they’ve used. Get a few quotes and make sure you like the person you’re dealing with.”
Whether you conduct the research yourself or use the help of a service provider, actually turning the results of the research into effective outcomes is most crucial. “It is a very important step in the process, and that’s where you do need very clever strategists inside a company or employed to help you do that,” says Ruthven.
“We find that’s where a lot of clients get stuck, they get the results and then say, well now what do we do?” admits Donegan. “Clients need to understand how to use the results to get benefit for their business. We recommend they set goals for what they want to achieve so they can look back and measure their ROI. There’s no point doing the research and putting the report in the drawer. It also helps to do some comparative research so you might need to do it again in 12 months or two years to see how your performance has changed. If you’ve implemented changes, have they worked?”
Benchmarking is one way businesses can use their market research effectively. Often used to improve business performance, benchmarking is a process of comparing characteristics of your business with other businesses.
Anton Benc, co-director of Benchmarking Partnerships, defines benchmarking as “a business excellence tool for finding, adapting and implementing very good or outstanding practices so organisations can improve their performance”.
When benchmarking your business, market research will be one method used to establish key indicators (benchmarks) to measure the performance of your business against. For example, purchasing an industry report (market research) that highlights benchmarks, such as important success factors for that industry, will enable a company to establish where they sit against those industry benchmarks.
Benchmarking can involve measuring and comparing the performance of your business as whole, or specific indicators, such as staff retention, customer service, productivity, brand awareness, innovation practices, debt management. “One needs to be very clear on the parts of the business you’re wanting to benchmark,” warns Benc. “Benchmarking the whole business is a difficult task because every business is different and the best value out of benchmarking is highlighting those things that are most urgent for improvement and those that are strategically important.”
Benc says the most important thing is to establish why there is a need to benchmark x, y and z. “We try and unpack the strategic intent of why they’re wanting to do benchmarking in that area. A reason for that is to make sure it is strategically linked to an organisation’s goals and it’s not just a hearsay request by a senior executive or someone wishing to compare data. Simply comparing data isn’t really all that useful. It doesn’t actually help the organisation improve its performance—it might help give a flavour of how well they’re doing compared with others, but it doesn’t tell us how to improve.”
Benchmarking Partnerships outline the benchmarking process to involve the following steps:
1. prioritisation of strategic improvement needs (the why)
2. measurement (the what—the benchmarks)
3. the practices (the how—the doing of benchmarking)
4. re-measuring then tracking performance improvement.
Businesses may want to conduct an internal benchmarking study to compare performance across different sites, divisions or branches, or you may want to establish how you’re performing within your industry, for example. External benchmarking, then, can be in the form of benchmarking across the sector, be it public or private, and specific areas of that sector, or can be across different industry partners where common industry partners may not be in direct competition but are willing to share what they do well.
“Another form of external benchmarking, which is probably the greatest value for organisations wanting to implement big change, is what we call generic benchmarking, and that’s benchmarking outside your own industry,” explains Benc. “So, if we have a financial services company, they may want to choose partners from a petroleum oil base or a utility organisation. So [the benchmarking study] doesn’t focus on the product or service, it focuses on the business outcomes across management and the operational processes for those outcomes.”
The question of who you should partner with in a benchmarking study and how to go about making that partnership happen, is crucial and difficult. Service providers like Benchmarking Partnerships can help broker such relationships. External benchmarking programs can also be facilitated through industry associations and business support groups, and a number of industry benchmarking guides can also be accessed online, such as MAUS Business Systems’ (www.maus.com.au) range of 80 industry-specific benchmarking guides. Each individual guide shows you step-by-step how to benchmark your business against your specific industry.
Ruthven believes the most important thing when it comes to benchmarking is to refer to ‘world’s best practice’. “Benchmarking should never be done over what you’ve been doing in recent years, because you’re only comparing yourself with yourself and that’s a fool’s paradise. You’ve got to compare yourself with not just one other company but the best company in the world. So, benchmarking should always be done, ultimately, against world’s best practice. In other words, who is the smartest, best operator in the world and how are they doing it, both operationally and financially. That becomes your benchmark to see if you can copy them.”
All of our experts agree that market research and benchmarking should be done on an ongoing basis. While a change in the business (i.e., new product, new system, new location) may require a more specific and in-depth analysis, regular research and benchmarking practices are useful for measuring your ongoing performance, as well as your return on investment in the initial research or benchmarking project.
“Benchmarking should be an ongoing form of improvement,” says Benc. “Once the benchmarking cycle of improvement is completed, if it continues to be strategically important, then it’s just a matter of monitoring the health of your performance and your practices, and one can re-measure that every now and again to get a feel for whether things are slipping or if they’re on track.”
While there’s no set amount businesses can expect to outlay for their market research and benchmarking efforts, Ruthven estimates most SMEs should expect to spend at least $10,000 a year, which could cover a few seminars and the odd industry report. The bigger SMEs might expect to spend up to about $100,000 a year, depending on their objectives.
Donegan says it all depends on the type of research. “If they do an off-the-shelf type of survey—a common benchmarking survey we use on a number of firms—you can start at a couple of thousand dollars and that includes the survey and a full report. Then, we’ve got projects that can cost more than $100,000, which would involve a combination of quantitative and qualitative results. Basically, projects that involve lots of face-to-face interviews, focus groups, and customised surveys are far more labour intensive so they can cost more.”
Thursday, May 3rd, 2007
By Stuart Orgill
Many companies decide to begin online survey software initiatives to make better business decisions in a variety of areas. Implementing online survey software can:
Once the survey process is brought in-house there are many other benefits that soon surface.
When a company begins an internal survey process, one of the first steps is to establish the frequency at which the team or individual will send out surveys. A natural pattern for survey distribution eliminates the long, punishing surveys that were previously sent to clients a few times per year.
In their place one can institute shorter, more efficient surveys with "bite size" data sets that are more actionable. With regular surveys there is the comfort of knowing that "you can always survey again next month" and obtain more actionable information. This drives down the data response time, and the company becomes more nimble.
Respondents to the surveys will also benefit. Stephen Covey has mentioned before that being listened to is like breathing emotionally. When clients are able to share their insights with the company they feel like they are being "heard."
Studies have shown that even those internal or external clients who don't respond to the survey benefit emotionally by knowing that the company is listening.
1. To study needs wants and expectations of the customers.
2. To find out reactions of customers to products of the company.
3. To evaluate company's sales promotion measures for suitable adjustment and improvements.
4. To study current marketing problems and opportunities for suitable follow up.
5. To suggest introduction of new products, modification of existing products.
6.To study marketing competition, channel of distribution and pricing for suitable changes if necessary.
7. To find methods for making the product popular and raising its goodwill and marketing reputation.
Q2. On which bases we divide market in to distinct subsets? (5 marks)
Basis for segmenting consumer markets:
– Nations, regions, states, counties, cities, neighborhoods, climate, population density etc
– Age, gender, family size, family life cycle, income, occupation, education, religion, race, nationality etc
– Social class, lifestyle, personality etc
– Purchase occasion, benefits sought, user status, user rate, loyalty status, readiness status, attitude
toward product etc.
Basis for segmenting business markets:
– Industry, company size, location
• Operating variables
– Technology, user/non-user status, customer capability
• Purchasing approaches
– Purchasing function organization
– Power structure
– Nature of existing relationships
– General purchase policies
– Purchasing criteria
• Situational factors
– Urgency, specific application, size of order
• Personal characteristics
– Buyer-seller similarity, attitudes towards risk, loyalty
Segmenting international markets:
Like domestic markets, international markets can also be segmented on the following criteria;
• Geographic location
• Economic factors
• Political & legal factors
• Cultural factors
– • Intermarket segmentation (segment consumers with similar profile but different countries)
Q3. With the same business setup, what is cheapest and easiest way to go international? (5 marks)
• Simple mode of internationalizing a domestic business
– Allows a firm to quickly enter the foreign market
– Often involves less financial exposure
– Permits a firm to enter a foreign market gradually, and in this way allows it to assess local conditions
and fine-tune its products to better suit the needs of the customers in the host country
– Little control over marketing and distribution in the host country
– Can quickly lose market to other firms
– In case of many goods, transportation costs may be high rendering the exported products too
expensive for host markets
Forms of exporting:
– Occurs when a firm sells its products to a domestic customer, who in turn exports the product, in
either its original form or a modified form
– Involves sales to customers - either distributors or end-users - located outside the firm’s home country
– Is selling of goods / services by a firm in one country to an affiliated firm in another
• Export management companies
– A firm which acts as a client’s export department - an EMC’s staff are typically knowledgeable about
the legal, financial and logistical details of exporting and importing.
– Can be commission agents or may take title of goods by profiting from the difference between local
buying price and selling price to the foreign customer
• Enterprise networks
– A group of companies producing related or complementary products pooling resources together to
form marketing companies
International trading companies
– Are firms which are directly engaged in importing and exporting a wide variety of goods on their own