Evaluate the role of market research in the decision making process of an organization. Zan Chen from Queen Mary, University of London In the business world, to make a proper decision is related to success directly. Every manager is confronted with the same question which is how to complete this mission. Economists cannot figure out a solution to gain the 100% of correct rate in decision making, but they build a number of models and find many methods to increase the possibility. Brainstorming can help to develop potential alternatives.
The motivation theory satisfies employees about their work and it leads to high efficiency. Besides both ideas above, market research can be a strong technique to solve the problem. During the process of decision making in a new plan, market research plays a vital role for any business or organization. This paper will discuss the effect of market research and give some suggestions to help managers make correct decisions. Firstly, it will give a definition of the subject. Then, the essay will discuss the function of market research in the detailed steps of decision making process.
Finally, the challenges of market research in the future will be determined, followed by some suggestions on how to meet the challenges. According to DJS Research Ltd, “Market Research is a systematic, objective collection and analysis of data about a particular target market, competition, and/or environment” (MarketResearchWorld. com). Some form of data collection which is done by desk research or primary research that is gathered from respondents directly is incorporated into it. The aim of market research is to get a better understanding of the working subject.
As the competition of the world market becomes more and more fierce, market research is included in the organization no matter large or small. Before the discussion of the role of market research in decision making, the process of decision making should be listed. David Boddy (2011), a professor of business and management from the University of Glasgow separated the decision making process into six steps: “recognizing a problem or opportunity, setting and weighting the decision criteria, developing alternatives, comparing alternatives and making a choice, implementing the choice and evaluating the decision” (p. 97-200). Market research has a positive effect on all of the steps and now some of them will be discussed. The first step, defining the problem, is the key of the whole process which affects all the following steps; if the opportunity is inaccurately defined, a wrong beginning point will mislead every step in the decision making process. More specifically, if the unsuccessful decision making leads the company to low profits or declining sales, the firm may have a problem with poor market research. The decreasing profits and sales are the symptoms of the problems.
By identifying them separately from their symptoms, the real problem will be properly determined. According to research on shopping center marketing by Dr. Gentleman (2001), for example, a center with little competitors will possibly want to establish the maximum of additional geographic areas, in-mall habits and demographic segments. Another example is that a center with a new competitor will possibly analyze the habits of the residents in this area to develop the most effective strategy against the new competition.
Decision criteria influence the target and purpose of market research. Boddy (2011) stated in his book that “To decide between options people need decision criteria: the factors that are relevant to the decision” (p. 198). The factors here can be information, time, personnel, equipment, supplies and any other limiting resources which market research can well define. For instance, in an opportunity of importing a new model of laptop, criteria may include the effect of design, price, compatibility with other systems, delivery, and warranty.
After determining criteria, researchers need to choose a method to continue. In market research, there are two basic methods—quantitative research and qualitative research. According to Dr. Karakaya (1991), “the focus of qualitative research is developing a hypothesis or gaining information concerning respondent behavior”. By contrast, “quantitative research is designed to explain relationships among variables and the frequency of occurrence”. Which method to choose mainly depends on the research objectives, but in many situations, combining both f them can gain the most useful information. Another task is developing and comparing alternatives based on the data collected in market research. A manager may move forward after only the first or most obvious answers are considered because of the pressure of time. However, that may not give the best result in a permanent solution as a complete examination of the challenge is needed in solving problems productively. Therefore, a manager should work out and consider a certain number of alternative solutions to the problem before quickly deciding what to do next.
Here managers will face another problem, to choose a suitable amount of alternatives in the market research. Too few will limit choices, while too many will be expensive. Boody (2011) found that too many choices beyond a certain number will lead consumers to stress, frustration and anxiety about making the wrong decision. During the comparison of alternatives, group decision making has clear advantages compared with individual one, which can provide a broader view, satisfying employees to support the final decision and reduce uncertainties for the manager.
It is more precise to determine the best choice with acceptable feasibility, effectiveness and consequences. The final step is evaluation. Surveys, the most common form of market research, are often used to see whether the decision has solved the problem correctly. Karakaya (1991) stated that “Regardless of the survey type, market researches face a major problem in gathering data through surveys: the response rate” (p. 37). The main reason for a low response rate is interviewer bias and the prejudice of the interview process.
Sometimes offering some free presents or coupon tickets can be an effective method and good training questionnaires can also reduce the problem. After the collection of information, if the result shows that the problem has not been resolved, the manager must find out what went wrong. There may be four possibilities: first, whether a wrong alternative was selected; second, the correct alternative was chosen but implemented improperly; third, the original problem or opportunity was recognized incorrectly; last, lack of time was given to make the implemented alternative successful (CliffsNotes. om). People should pay attention to the future rather than past through evaluating market research. With the progress of time, market research will face two aspects of challenges. First and foremost, the original role of market research, which is applying scientific methods to the decision making process, will be more focused. Achenbaum (1987) explained it as “more than just discerning relationships but rather understanding their numerical magnitude and the behavior and other attributes with which they are associated” (p. RC-6).
The more crucial challenge is that people will pay more attention to explain and operate figures than to research methods and data collection, which to show market research is a helpful tool of decision making. Besides, more information will be included in the decision criteria as market research continues to grow. The key issue will not be the description and presentation of numbers, but will be the application of superfluous figures and how to analyze and understand the data. Thus, some suggestions should be given to market researchers to help them meet the challenge.
According to Achenbaum’s research (1987), first of all, they should reposition themselves as problem solvers. Otherwise, their aptitude on dealing with decision-making will reduce. Learning more knowledge of marketing and management or treating themselves like a part of a business group may be good choice. Second, market researchers should be confident that formulating hypotheses is essential to the research with a premise that understanding the relationship between creativity and information clearly. In other words, think beyond the numbers.
Third, they need to persist on the application of scientific techniques, which include suitable sample designs, methods of controlling variables and objective mechanisms for questioning and analyzing data, once they become a responsible part of a marketing group. After all, figures are useful only if they are reliably acquired. Last, market researchers should help to develop the relevant theories of marketing or even business and management. In short, market research affects all the stages of the decision making process and cannot be replaced.
Firstly, it begins after the problem or opportunity of situations has been determined. Then, based on the decision criteria, different methods of market research can be applied. Next, the data collected in the market research will be used to analyze and compare alternatives. Lastly, after the final decision implement, the information gathered from surveys will help to find out the result of the decision and whether it is made correctly or not. Subsequently, the challenge to market research is twofold, which one is from the focus on its original purpose and the other is the spotlight on data explanation and application. Four pieces of advices have been listed to help market researchers meet the challenges. From all above, this essay can safely make the conclusion that market research plays a vital role in the decision making process of an organization. As long as the business world keeps fresh and active, market research will continue appearing in any business or organization.
Reference * Achenbaum, A. A. (1987). The Future Challenge to Market Research. Journal of Advertising Research, 27, RC-3-RC-6. * Boddy, D. and Paton, S. (2011). Management: An Introduction. Essex: Pearson Education Limited. The Decision-Making Process. Retrieved August 20, 2012, from http://www. cliffsnotes. com/study_guide/The-DecisionMaking-Process. topicArticleId-8944,articleId-8863. html * DJS Research Ltd. Definition of Market Research. Retrieved August 19, 2012, from http://www. marketresearchworld. net/index. php? option=com_content&task=view&id=14&Itemid=38. * Gentleman, K. L. (2001). Shopping Centre Marketing. New York: International Council of Shopping Centers * Karakaya, F. (1991). Marketing Research: A Pocket Guide for Managers. SAM Advanced Management Journal, 56 (Summer), 34-40.