Case study 2.1
1 Small ﬁrms may think undertaking marketing research is too expensive and not worth their while. How might you persuade them otherwise? Under what circumstances might there be some truth in their viewpoint? 2 Construct a research proposal that has as its purpose identifying new product and market opportunities for a small computer software developmentcompany currently employing 30 staff and achieving an annual sales turnover of £8 million. 3 Discuss the basic methods of collecting marketing research information and outline the circumstances under which each of the identiﬁed methods might most appropriately be used. 4 Why is it important to indicate at the research planning stage how one is going to analyse the data? 5 What is meant by thelimitations of a study? Why are they important?
CASE STUDY 2.1: NEW SHOE COMPANY
The New Shoe Company, based in the English Midlands, is experiencing a fall in proﬁts. The company measures proﬁts in terms of the annual pre-tax return on capital employed earned by the company. The sales director says that falling proﬁtability is a reﬂection of the current slump in the market. Total demand in themarketplace is much less than it was 12 months ago and the company has struggled to maintain its market share at the previous level as competition has intensiﬁed. Competition from European manufacturers has been sharpened by changes in EU trading regulations and Spanish manufacturers, in particular, have taken advantage of their lower cost structure to make inroads into the British market. At the sametime, the New Shoe Company has failed to take full advantage of opportunities in Europe. It has not fully developed its market niching strategy where it can gain a competitive advantage. The sales director blames the ﬁrm’s lack of competitiveness on the poor performance of the R&D team and the inability of the manufacturing departments to control costs. The technical director claims that the ﬁrm’sproducts are competitive with any that are produced worldwide. Indeed, in her view, the ﬁrm’s products are by far the best available at the price offered. She points to the lack of marketing effort expended by the ﬁrm in the past year, pointing to the necessity to keep the ﬁrm’s name before the public at all times, especially when competition is increasing in
Chapter 2 • Planningthe research project
strength. At the same time she recognises that marketing effort requires ﬁnancing and that this was not adequately provided during the period in question. The production director points out that the company has been able to lower its manufacturing costs substantially through the introduction of new technology into the manufacturing process. However, he points out theaccounting practices adopted by the ﬁrm distort the true picture. Proﬁtability, in his view, has improved, although this is not truly reﬂected in the company’s management accounts. The ﬁnance director feels that the drop in proﬁtability is attributable to recent acquisitions the ﬁrm has made. Ventures into retailing have not been as proﬁtable as had ﬁrst been supposed. This might to some extent have beenreﬂective of bad timing on behalf of the company, given the current recession, in making such acquisitions. The managing director points out that there clearly is a problem and that perhaps one should pay particular attention to what competitors are doing and how the ﬁrm is responding from a marketing viewpoint.
1 Given the limited information in this case, what do you think could bethe real problem or problems in this example? 2 Depending on the real nature of the problem identiﬁed, how might marketing research help in this case?
CASE STUDY 2.2: CHERI-ROSE
The editor of Cheri-Rose, a women’s fashion magazine, has approached you about undertaking some research on behalf of the magazine. The magazine has not been successful in attracting handbag manufacturers as...