Research and Decision Making

Study Notes on Research and Decision Making

Research in particularly important in the decision making process of various business organizations. Research in common context refers to a search for knowledge. It can also be defined as a scientific and systematic search for gaining information and knowledge on a specific topic or phenomena.

Definition

Some of the definitions of Research are:

Redman and Mory define research as a “systematized effort to gain new knowledge”.

Some people consider research as a movement, a movement from known to unknown.

Research refers to the systematic method consisting of

· Enunciating the problem,

· Formulating a hypothesis,

· Collecting the fact or data,

· Analyzing the facts and

· Reaching certain conclusions

Characteristics of Research

a. Systematic Approach

Each step must of your investigation be so planned that it leads to the next step. Planning and organization are part of this approach. A planned and organized research saves your time and money.

b. Objectivity                                 

It implies that True Research should attempt to find an unbiased answer to the decision-making problem.

c. Reproducible

A reproducible research procedure is one, which an equally competent researcher could duplicate, and from it deduces approximately the same results. Precise information regarding samples-methods, collection etc., should be specified.

d. Relevancy

It furnishes three important tasks:

· It avoids collection of irrelevant information and saves time and money.

· It compares the information to be collected with researcher’s criteria for action

· It enables to see whether the research is proceeding in the right direction.

e. Control:

Research is not only affected by the factors, which one is investigating but some other extraneous factors also. It is impossible to control all the factors. All the factors that we think may affect the study have to be controlled and accounted for.

Structure of Research

Most research projects share the same general structure. It structure can be thing as the shape of an hourglass.

Importance of Research in Management Decision

The role of research has greatly increased in the field of business and economy as a whole. The study of research methods provides you with the knowledge and skills you need to solve the problems and meet the challenges of today’s modern pace of development. Three factors stimulate the interest in a scientific research to decision making.

i. The manager’s increased need for more and better information.

ii. The availability of improved techniques and tools to meet this need.

iii. The resulting information overload

The usefulness and contribution of research in assisting marketing decisions is so crucial that it has given rise to the opening of a new field altogether called ‘marketing research’. Market research is basically the systematic gathering, recording and analyzing of the facts about business problems with a view to investigate the structure and development of a market for the purpose of formulating efficient policies for purchasing, production and sales. Research with regard to demand and market factors has great utility in business. Market analysis has become an integral tool of business policy. Once sales forecasting is done, the Master Production Schedule (MPS) and Material Requirement Planning (MRP) can be efficiently done within the limits of the projected capacity based on the MPS Budgetary control can be made more efficient, thus replacing subjective business decisions with more logical and scientific decisions.

Modern industry with its large-scale operations tends to create a gulf between the customer and the manufacturer. Particularly when business is too big and operations are too far-flung, one cannot depend upon casual contacts and personal impressions. Research methodology has been developed as the tool by which business executives keep in touch with their customers. If an entrepreneur has to make sound decisions, he must know who are his customers are and what they want. To a certain extent he relies on his salesmen and his dealers to supply him with market information but in recent years, more and more firms/executives have turned to research methodology as a medium of communication between the customer and the company. Marketing research is the link between the manufacturer and the consumer and the means of providing consumer-orientation in all aspects of the marketing function. It is the instrument of obtaining the knowledge about the market and consumer through objective methods, which guard against the manufacturer’s subjective bias. Many Researchers define marketing research as gathering, recording and analyzing of all facts about problems relating to the transfer and sale of goods and services from producer to consumer. Research methodology is an essential prerequisite for consumer oriented marketing. It is necessary for developing the marketing strategy where in factors under the control of the organization, viz., product distribution system, advertising, promotion and price can be utilized so as to obtain maximum results in the context of the factors outside the control of the organization viz., economic environment, competitor and laws of land.

Example:-

P&G shows how marketing research is used to identify new opportunities in the marketplace. The company was getting a lot of data on Vicks- Vaporub. The analysis of such data revealed that the most common symptom of cold was a headache and that majority of adults typically take a pill to cure it. This disclosed an opportunity for a product that can treat the headache as well as the other symptoms. The company thus launched Action 500. It not only treated headache but also gave relief from blocked nose. Marketing research can therefore lead to the development of a new product.

Marketing research is undertaken to assist the marketing function. Marketing research stimulates the flow of marketing data from the consumer and his environment to marketing information system of the enterprise. Market research involves the process of

· Systematic collection

· Compilation

· Analysis

· Interpretation of relevant data for marketing decisions

This information goes to the executive in the form of data. On the basis of this data the executive develop plans and programmers. Advertising research, packaging research, performance evaluation research, sales analysis, distribution channel, etc., may also be considered in management research.Research tools are applied effectively for studies involving:

1. Demand forecasting

2. Consumer buying behavior

3. Measuring advertising effectiveness

4. Media selection for advertising

5. Test marketing

6. Product positioning

7. Product potential

Marketing Research

i. Product Research: Assessment of suitability of goods with respect to design and price.

ii. Market Characteristics Research (Qualitative): Who uses the product? Relationship between buyer and user, buying motive, how a product is used, analysis of consumption rates, units in which product is purchased, customs and habits affecting the use of a product, consumer attitudes, shopping habits of consumers, brand loyalty, research of special consumer groups, survey of local markets, basic economic analysis of the consumer market, etc.

iii. Size of Market (Quantitative): Market potential, total sales quota, territorial sales quota, quota for individuals, concentration of sales and advertising efforts; appraisal of efficiency, etc.

iv. Competitive position and Trends Research

v. Sales Research: Analysis of sales records.

vi. Distribution Research: Channels of distribution, distribution costs.

vii. Advertising and Promotion Research: Testing and evaluating,   advertising and promotion.

viii. New product launching and Product Positioning.