Page 13 - DMGT404 RESEARCH_METHODOLOGY

Unit 1: Introduction to Research

Notes
Example: Company 'X' wants to launch a product. The company's intuitive feeling is that,
the product failure possibilities is 35%. However, if research is conducted and appropriate data
is gathered, the chances of failure can be reduced to 30%. Company also has calculated, that the
loss would be 3,00,000 if product fails. The company has received a quote from MR agency. The
cost of research is 75,000. The question is "Should the company spend this money to conduct
research?"
Solution:
Loss without research = 3,00,000 × 0.35
= 1,05,000

Loss with research = 3,00,000 × 0.30
= 90,000
Value of research information = 1,05,000 – 90,000
= 15,000

Since the value of information namely 15000 is lower than the cost of research 75,000,
conducting research is not recommended.

1.3.3 Preparing a List of Needed Information

Assume that company 'X' wants to introduce a new product (Tea powder). Before introducing it,
the product has to be test marketed. The company needs to know the extent of competition, price
and quality acceptance from the market. In this context, following are the list of information
required.
1. Total demand and company sales:

Example: What is the overall industry demand? What is the share of the competitor? The
above information will help the management to estimate overall share and its own shares, in
the market.
2. Distribution coverage:

Example:
(a) Availability of products at different outlets.
(b) Effect of shelf display on sales.

3. Market awareness, attitude and usage:

Example: "What percentage of target population are aware of firm's product"? "Do customers
know about the product"? "What is the customers' attitude towards the product"? "What percentage
of customers repurchased the product"?
4. Marketing expenditure:

Example: "What has been the marketing expenditure"? "How much was spent on promotion"?

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