CHAPTER FIVE

MARKETING AND NEW

VENTURE DEVELOPMENT
 5.1. Marketing Research
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Marketing research is the systematic and objective

identification, collection, analysis, and dissemination of
information for the purpose of assisting management in
decision making related to the identification and
solution of problems and opportunities in marketing.
Marketing research is systematic. Thus, systematic
planning is required at all the stages of the marketing
research process. The procedures followed at each stage
are methodologically sound, well documented, and, as
much as possible, planned in advance. It uses the
scientific method, in that data are collected and analyzed
to test prior thinking or hypotheses.
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Marketing research is objective. It attempts to provide

accurate, impartial information.
5.1.1. The Role of Marketing Research in Decision Making

There are three Functional Roles of Marketing Research.

These are:
 Descriptive Function - the gathering and presentation of
statements of fact.
 Diagnostic (analytical) Function - The explanation of data.
 Predictive Function - Specification of how to use the
descriptive and diagnostic research to predict the result of a
planned marketing decision.
 5.1.2. Components of Marketing Research
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Marketing researchers deal with many aspects of a

market including the following:
 Market size: this deals with the number or value of
units sold to a market in a given period.
 Market Share: this one is about a specific
corporation’s share of the market size out of the
whole market of a product or products of the same
purpose.
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 Market penetration: this is a marketing strategy

which is used to know when a company
enters/penetrates a market with current products to get
better market share by lowering the price of a product.
 Brand equity research – this research is conducted
to know how favorably consumers view the brand.
 Buyer decision processes research – this part of
marketing research activity is used to determine what
motivates people to buy and what decision-making
process they use.
 5.1.3. Customer satisfaction research
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In this type of research there are different types of research that

are used to assess about customers.
 Distribution channel audits - to assess distributors’ and
retailers’ attitudes toward a product, brand, or company.
 Marketing effectiveness and analytics - Building models and
measuring results to determine the effectiveness of individual
marketing activities.
 Mystery Consumer or Mystery shopping – here the
researcher acts as a shopper. This is often used for quality control
or for researching competitors' products.
 Positioning research – this research is mostly conducted to
answer questions like
 How does the target market see the brand relative to competitors?
 What does the brand stand for?
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 Price elasticity testing – here the objective of the

research is to determine how sensitive customers are to
price changes.
 Sales forecasting - to determine the expected level of
sales given the level of demand. With respect to other
factors like advertising expenditure, sales promotion etc.
 Segmentation research – this type of research helps to
determine the demographic, psychographic, and behavioral
characteristics of potential buyers.
 Test marketing – this is a small-scale product launch
used to determine the likely acceptance of the product
when it is introduced into a wider market.
 5.1.4. Marketing Research Process
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 Since research is a process which consists of a number of steps to

be accomplished in a logical and systematic manner, marketing
research consists of the following related phases:
Step 1: Define the research purpose or objectives
The following questions help to establish objectives:
 Where potential customers buy the product?
 Why they purchase there?
 What is the size of the market? How much of it can your business
capture?
 How does your business compare with competitors?
 The impact of promotion on customers
 What types of products are desired by potential customers?
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Step 2: Research Design Formulation

The research design is a blueprint for conducting the
marketing research. More formally, formulating the
research design involves the following steps:

 Study period and place determination

 Methods of collecting quantitative and qualitative data
 Definition of the information needed
 Questionnaire design
 Measurement and scaling procedures
 Sampling process and sample size
 Plan of data analysis
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Step 3: Gather secondary data

Secondary data is a data which is originally collected
by others for their own purpose, but such data can be
used by the researcher when it is relevant to the
current study. Secondary data:
is less expensive
Can be acquired within or outside the venture.
May be out-dated and less valid.
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Step 4: Gather Primary Data

Primary data collection techniques can be categorized as;
 Observational techniques
 Focus groups discussion
 Experimentation- investigates cause and effect
relationships.
 Survey techniques- generate data by asking people
questions and recording their responses.
The following are examples of survey techniques.
 Mail questionnaires
 Telephone interviews
 Personal interviews
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Step 5: Data Processing and Analysis

Data processing includes the editing, coding,
transcription, and verification of data.
And data analysis, guided by the plan of data
analysis, gives meaning to the data that have been
collected.
Research results should be evaluated and interpreted
in response to the research objectives.
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Step 6 Report Preparations and Presentation

At the end, the research results will be written in a report form
and presented to the concerned parties. The report includes:
 the specific research questions identified,
 describes the approach,
 the research design,
 the data collection, and sampling procedures
 the data processing and analysis procedures
 The major findings and suggestions for actions.
 In addition, an oral presentation should be made to
management using tables, figures, and graphs to enhance
clarity and impact.
 5.3. Competitive Analysis
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Competitive analysis refers to determining the

strengths and weaknesses of competitors and
designing ways to take opportunities or tackle
threats posed by competitors.
Competitive analysis is important for businesses
since it has some advantages such as the following:
 It helps management understand its competitive
advantages/disadvantages relative to competitors.
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 It generates understanding of competitors’ past,

present (and most importantly) future strategies.
 It provides an informed basis to develop strategies
to achieve competitive advantage in the future (e.g.
how will competitors respond to a new product or
pricing strategy?)
 It helps forecast the returns that may be made
from future investments.
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Competitive analysis is a method of gathering data

about competitors from different sources.
It should answer, among other things, the following
questions:
 Who are your competitors?

 What customer needs and preferences are you

competing to meet?
 What are the similarities and differences between
their products/services and yours?
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 What are the strengths and weaknesses of each of

their products and services?
 How do their prices compared to yours?

 How are they doing overall?

 How do you plan to compete? Offer better quality

services? Lower prices? More support? Easier access
to services?
 How are you uniquely suited to compete with them?
 5.3.1. Steps of Competitive Analysis
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Every business owner should have a complete

understanding of the competitive landscape in the
market.
Competition is defined as any business that provides
a similar service or product in the same market,
region or industry.
A strategic business owner not only knows who its
competitor is but also understands the best way to
position ahead of its competitor.
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The following provides a step-by-step process in creating

your competitive analysis.
1) Identify your competitors:
 Determine both local and international competitors.
 Be sure to define the competitive landscape broadly. Your
competitor includes anything that could draw customers away
from your business.
2) Gather information about competitors:
 At this stage you need to know:
 What markets or market segments your competitors serve;
 What benefits your competitors offer;
 Why customers buy from them;
 And as much as possible about their products and/or services, pricing,
and promotion strategies.
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To gather information about your competitor you

can go either to your competitors’ company site or
to the company's Web site (if any). Using which
you can learn about:
 promotion strategies by visiting their business site
 Prices.
 your competitors’ customers
 Vendors or suppliers, and their employees.
 trade shows
 Publicly available information - from Newspapers, magazines,
press releases and online publications.
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3) Analysing the Competition

After studying the information you have gathered
about each of your competitors, ask yourself these
primary questions:
©How are you going to compete with that
company?
 By identifying market niche (a small segment market).
 Is there a particular segment of the market that your
competitor has overlooked?
 Is there a service that customers or clients want that
your competitors do not supply?
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4) Develop a pricing
 The last step in the process is to develop a pricing model that
represents what you are offering the market and the value
you bring to your target buyers.
 There are many factors that go into designing the appropriate
pricing structure.
 Thus, you will need to do some research and evaluate;
 the price levels your market will bear,

 your cost basis for the development of your product,

 how much you need to cover overhead and marketing costs

and
 How much profit you think is appropriate for what you are
offering.
 5.4. Marketing Strategy
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A marketing strategy is a process that can allow an

organization to concentrate its limited resources on the
greatest opportunities to increase sales and achieve a
sustainable competitive advantage.
Marketing strategy is a method of focusing an
organization's energies and resources on a course of
action which can lead to increased sales and dominance
of a targeted market.
Marketing strategy determines the choice of target
market segments, positioning, marketing mix, and
allocation of resources.
 5.4.1. Pricing Strategy
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Price is the value placed on what is exchanged. It can

even be barter.
Price is often the only element the marketer can change
quickly in response to demand shifts.
It relates directly to total revenue TR = Price * Quantity
Profit = TR - TC
Pricing strategies are subject to incredibly complex
environmental and competitive forces.
This pricing structure changes through time as products
pass through their life cycles.
To come up with this situations, marketers use dynamic
pricing strategies.
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The following are some of pricing strategies mostly

applicable in the real world scenario.
Price Skimming: this is a type of marketing strategy
that firms use by charging the highest possible price
that buyers who most desire the product will pay.
Penetration Pricing: In this strategy, prices of
products are reduced compared to competitors’ price
for the same product to penetrate into markets and to
increase sales. However, the quality of the product
should not be lower as compared to other competitors’
product.
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Cost-plus pricing: Any amount that is above unit

cost may be considered.
Mark-up pricing. A certain percentage of the
selling price is added to unit cost.
Competition Oriented Pricing: Considers
competitors prices primarily; but the market type
matters- monopolistic, competition or oligopoly?
Odd pricing: This is Psychological
pricing method based on the belief that
certain prices or price ranges are more appealing
to buyers.
 5.4.2 Promotion Strategies
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 Promotion is the communication of the company and its

products to customers.
 Promotional strategy is choosing a target market and
formulating the most appropriate promotion mix to influence it.
An organization’s promotional strategy can consist of:
1. Advertising:
 It is any paid form of non-personal, one-way, mass
communication about an organization, good, service, or idea by
an identified sponsor.
2. Personal selling
 This is the two-way flow of communication between a buyer and
seller, often in a face to face encounter, designed to influence a
person’s or group’s purchase decision.
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3. Public relations
 Public relation is a form of communication that seeks to
change the perceptions of customers, share-holders,
suppliers, employees and other publics about a company and
its products.
4. Sales promotions
 This promotion type involves short term incentives of value
such as discounts, free samples, and prizes to be offered to
arouse interest of customers in buying the good/service.
 Businesses may use one of the above promotional mix
elements to arouse the interest of customers and make them
take action by informing, persuading and reminding about
the goods and services that they provide to the market.
 5.4.3 Distribution Strategies
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A successful product or service means nothing unless the

benefit of such a service can be communicated clearly to
the target market.
For product-focused companies, establishing the most
appropriate distribution strategies is a major key to
success, defined as maximizing sales and profits.
Marketing Channels: These are
individuals/organizations involved in the process of
making the product available for use or consumption by
consumers.
Channels are used to improve exchange efficiency.
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Direct and Indirect channels:

 Direct channels:
 In this type of channel, producers and end users
directly interact.
 Indirect channels:
In this type of channel intermediaries are inserted
between seller and buyer.
Intermediaries include Merchant Wholesalers,
retailers, dealers, agents, brokers; and
manufacturer’s branches and offices.
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The following factors should be considered to select the

best channel under the condition of using best distribution
strategy.
 Company Factors: financial, human and
technological capabilities of a company to do its
business activities.
 Market Characteristics: Geography, market density,
market size, target market
 Product Attributes: perishability, value and
sophistication of the product.
 Environmental Forces: those forces that affect the
business like competition, technology and culture.
THE END