Introduction to Market Research

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Chapter 1

Introduction to Market Research

Learning Objectives
After reading this chapter, you should understand: – What market and marketing research are and how they differ. – How practitioner and academic market(ing) research differ and where they are similar. – When market research should be conducted. – Who provides market research and the importance of the market research industry.

Keywords Full service and limited service providers Á Market and marketing research Á Syndicated data

Introduction
When Toyota developed the Prius – a highly fuel-efficient car using a hybrid petrol/ electric engine – it took a gamble on a grand scale. Honda and General Motors’ previous attempts to develop frugal (electric) cars had not worked well. Just like Honda and General Motors, Toyota had also been working on developing a frugal car but focused on a system integrating a petrol and electric engine. These development efforts led Toyota to start a development project called Global Twenty-first Century aimed at developing a car with a fuel economy that was at least 50% better than similar-sized cars. This project nearly came to a halt in 1995 when Toyota encountered substantial technological problems. The company solved these problems, using nearly a thousand engineers, and launched the car, called the Prius, in Japan in 1997. Internal Toyota predictions suggested that the car was either going to be an instant hit, or that the take-up of the product would be slow, as it takes time to teach dealers and consumers about the technology. In 1999, Toyota made the decision to start working on launching the Prius in the US. Initial market research showed that it was going to be a difficult task. Some consumers thought it was too small for the US, some thought the positioning of the controls was poor for US

E. Mooi and M. Sarstedt, A Concise Guide to Market Research, DOI 10.1007/978-3-642-12541-6_1, # Springer-Verlag Berlin Heidelberg 2011

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1 Introduction to Market Research

drivers, and there were other issues, such as the design, which many thought was too strongly geared toward Japanese drivers. While preparing for the launch, Toyota conducted further market research, which could, however, not reveal who the potential buyers of the car would be. Initially, Toyota thought the car might be tempting for people concerned with the environment but market research dispelled this belief. Environmentalists dislike technology in general and money is a big issue for this group. A technologically complex and expensive car such as the Prius was therefore unlikely to appeal to them. Further market research did little to identify any other good market segment. Despite the lack of conclusive findings, Toyota decided to sell the car anyway and to await public reactions. Before the launch Toyota put a market research system in place to track the initial sales and identify where customers bought the car. After the formal launch in 2000, this system quickly found that the car was being bought by celebrities to demonstrate their concern for the environment. Somewhat later, Toyota noticed substantially increased sales figures when ordinary consumers became aware of the car’s appeal to celebrities. It appeared that consumers were willing to purchase cars endorsed by celebrities. CNW Market Research, a market research company specialized in the automotive industry, attributed part of the Prius’s success to its unique design, which clearly demonstrated that Prius owners were driving a different car. After substantial increases in the petrol price, and changes to the car (based on extensive market research) to increase its appeal, Toyota reached total sales of over 2 million and is now the market leader in hybrid petrol/electric cars. This example shows that while market research occasionally helps and greatly increases sales, sometimes it contributes little or even fails. There are many reasons for market research varying...
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