How to do basic Market Research

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DrJohnRyder,United Kingdom,Researcher
Published Date:07-07-2017
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Basic Marketing Research: Volume 1 Handbook for Research Professionals Official Training Guide from Qualtrics Scott M. Smith Gerald S. Albaum © Copyright 2012, Qualtrics Labs, Inc.4 INTRODUCTION It’s been said that information is power. This simple cliché underscores the market control and business success that information yields. Marketing research is about collecting information. While it applies to a wide range of situations, marketing research gives decision-makers the information they need to find solutions to business problems, such as the following • How satisfied are customers with your product and service offering? • How will customers react to a decision to change a price or product? • What are service representatives hearing from customers? • What responses to competition will bring you success in a given market? Simply put, the solution to most business problems can be found through marketing research. While the foundations of research have existed for thousands of years, technological advances during the last century have made a wider range of studies possible. Increased Internet access in the last 15 years has made research available at a much lower cost and, therefore, more accessible to organizations of all sizes. As a result, the research field has exploded with new opportunities and methodologies, and organizations have more information at their disposal than ever before. At Qualtrics, we see all types of researchers: from students starting their first studies to elite researchers who have been conducting studies since before Internet surveys were even possible. The goal of this text is to help Qualtrics users improve their understanding of research so they can improve future studies. This text, along with its companion volumes, is designed to provide an introduction to all things marketing research. This first book in the research series addresses research methods, while the second focuses on analyzing data and interpreting results. Two other volumes are the Qualtrics Guidebook, a users’ guide to Qualtrics and 50 Perfect Surveys, a basic introduction to survey building. 5 This first volume starts with research basics. Chapter one provides an introduction to marketing research. It explains the nine-step process of how to design a study. Chapter two discusses how to focus your research and minimize error. Chapter three explores the secondary sources of information that are available to researchers. General principles for conducting interviews and minimizing error within them are the subject of chapter four. Chapter five, Interviewing Modes, delves deeper and explores specific modes of survey data collection. In chapter six, we discuss focus groups, hierarchical value mapping and other qualitative research methods. Chapter seven describes sampling procedures, including the computation of sample size, and we conclude with an introduction to the basics of experimental design in chapter eight. This book and its companion will be useful as you develop and implement your own research.An Introduction 1 to Marketing Research Successful entrepreneurs must adapt to an ever-changing business environment. In addition to the everyday aspects of running a business, a company has to consider materials, energy shortages, inflation, economic recessions, unemployment, and technological changes. A prot fi able company must also respond to the market with its products and advertising. A critical tool for measuring the market and keeping competitive is effective marketing research. In this chapter, we will introduce marketing research and discuss the tools you need to be successful. WHAT IS MARKETING RESEARCH? Think of marketing research as a search for information that will help you succeed in capturing market share. To begin, let’s consider the differences between fundamental and applied research. Fundamental research seeks to extend the boundaries of knowledge in a given area and doesn’t necessarily solve your immediate problems. Nevertheless, it has useful applications. It reveals information and relationships that could be useful at a later date. For example, The Green Yogurt company conducted fundamental research about consumer preferences for certain combinations of fruits, nuts, and caramel that differ in sugar type and strength of sweetness. Applied research gathers information to solve a specific problem or set of problems. For instance, customers engaged in a blind taste test would respond with what they specifically liked or disliked about a new yogurt product compared to a competitor’s product. You would use this information to tune your business plan, focus your advertising campaign, or improve your product. 2 MARkETINg R ESEARCH FOCUSING YOUR RESEARCH Marketing research focuses on understanding the customer, the company, and the competition. These relationships are at the core of marketing research. Companies must understand and respond to what customers want from their products. However, this relationship is always influenced by competitors and how their products are received by your market. Thus, you must clearly identify the customer, company, and competition before developing a research project. There are several important factors you must consider before you begin, including: • Your customers and competition • Awareness and image of your product • Product usage • Undiagnosed problems with your product • Customer desires and needs for new product development At the “Survey University,” we have identified twenty different types of applied research surveys that are fundamental to marketing research. Each focuses on a different aspect of marketing research and your business activities, and provides deep insights into your company’s market position, your products, your competition, and the market in general. These are shown in Exhibit 1.1.MARkETINg R ESEARCH 3 EXHIBIT 1.1 TWENTY DIFFERENT TYPES OF MARKETING SURVEYS 1 - MARKET DESCRIPTION SURVEYS: Determine the size and relative market share of the market. Provide key information about market growth, competitive positioning and share of market. 2- MARKET PROFILING-SEGMENTATION SURVEYS: Identify customers and non-customers, and why they are or are not your customers. Often a descriptive market segmentation and market share analysis. 3 - STAGE IN THE PURCHASE PROCESS / TRACKING SURVEYS: Where is the customer in the adoption process? Shows market Awareness – Knowledge – Intention – Trial – Purchase – Repurchase of the product. 4 - CUSTOMER INTENTION - PURCHASE ANALYSIS SURVEYS: Customer motivation to move from interest in the product to actual purchase. Key to understanding customer conversion, commitment and loyalty. 5 - CUSTOMER ATTITUDES AND EXPECTATIONS SURVEYS: Does the product meet customer expectations? Attitudes formed about the product and/or company. Improve ads, customer conversion, commitment and loyalty. 6 - CUSTOMER TRUST - LOYALTY – RETENTION ANALYSIS SURVEYS: Depth of consumer attitudes formed about the product and/or company. Especially for high priced consumer goods with long decision and purchase processes. 7 - NEW PRODUCT CONCEPT ANALYSIS SURVEYS: Appropriate in the initial screening of new product concepts. Likes and dislikes, acceptability and likelihood of purchase are especially useful measures. 8 - NEW PRODUCT ACCEPTANCE AND DEMAND SURVEYS (CONJOINT ANALYSIS): Estimating demand for new product descriptions, graphics, or prototypes. Yields market share estimates for alternative concept configurations. 9 - HABITS AND USES SURVEYS: Understanding usage situations, including how, when and where the product is used. May include a real or virtual pantry audit. 10 - PRODUCT FULFILLMENT SURVEYS: Evaluation of promised attribute and feature benet fi s (both tangible and intangible). Are expectations produced by advertising, packaging, and product appearance fulfilled? 4 MARkETINg R ESEARCH 11 - COMPETITIVE PRODUCT AND MARKET POSITIONING: “Best Practices” study of “How does the market view us relative to the competition?” Compares attributes and benet fi s of the product. 12 - BRAND EQUITY SURVEYS: What is psychological value that a brand holds in the marketplace? A composite of brand awareness, brand quality, brand associations and brand loyalty measures. 13 - ADVERTISING VALUE IDENTIFICATION AND ANALYSIS SURVEYS: Mapping the hierarchical attributes, benet fi s and values associated with and portrayed by an advertisement. Means-end analysis is often part of this type of study. 14 - ADVERTISING MEDIA AND MESSAGE EFFECTIVENESS SURVEYS: Identifies the impressions, feelings, and effectiveness in moving the respondent to a desired goal (increased awareness, product information, trial, repeat purchase). 15 - SALES FORCE EFFECTIVENESS SURVEYS: Sales activities, performance and effectiveness in producing the desired and measurable effect or goal. Often measured in a 360 degree survey completed by the sales person, the client (evaluating the sales call) and the supervisor responsible for evaluating the sales person. 16 - SALES LEAD GENERATION SURVEYS: (1) Timely use and follow-up of sales leads, (2) Qualifying sales leads (thereby saving valuable sales force time) and (3) Providing more effective tracking of sales leads. 17 - CUSTOMER SERVICE SURVEYS: Focus in detail on the actual customer service that was received, the process involved in receiving that service and the evaluation of the participants in the service process. 18 - CUSTOMER SERVICE REPRESENTATIVE (CSR) SURVEYS— ATTITUDES, BURNOUT, TURNOVER AND RETENTION: Customer Service Representatives hold attitudes that reflect on their job related activities including (1) the allocation of time; (2) solutions to customer needs; (3) how to improve their job; (4) best practices; (5) how well internal departments help customers. Focuses on reducing costs and increasing the quality of customer relationships. 19 - SALES FORECASTING AND MARKET TRACKING SURVEYS: Expert estimates of the market, judgmental bootstrapping (expert based rules describing how to use available secondary market information), conjoint analysis (estimation of consumer choice prefer- ences), and self-reported intentions to make future purchases. 20 - PRICE SETTING SURVEYS AND ELASTICITY OF DEMAND ANALYSIS: Estimates of demand elasticity, optimal price points, and prices too low or too high. Estimates for different product-service segments, or usage situations. Source: R ESEARCH 5 Each of these surveys focuses on a specific area of research that will be addressed in later chapters. For now, let us focus on the basics. FIGURE 1.1 THE BASIC RESEARCH PROCESS THE Given these 20 different types of marketing research studies, select one that you find RESEARCH interesting and then ask yourself two questions: first, how can you conduct your own PROCESS marketing research for this study? And second, what are the basic steps you need to follow in order to complete your project? STAGES In this chapter, we will show you the steps of conducting such a research project. Problem Figure 1.1 shows the stages in the research process. While these steps are presented in Formulation order, you can be creative and adapt the steps to meet your business needs. Some steps 1 can be completed in parallel to speed the project as it begins to develop. The major basic research issues are shown in Exhibit 1.2. Cost-Value Analysis 2 STAGE 1: FORMULATING THE PROBLEM Method of Formulating a problem is the first step in the research process. In many ways, research Inquiry 3 starts with a problem that management is facing. This problem needs to be understood, the cause diagnosed, and solutions developed. However, most management problems Research are not always easy to research. A management problem must first be translated Design into a research problem. Once you approach the problem from a research angle, you 4 can find a solution. For example, “sales are not growing” is a management problem. Translated into a research problem, we may examine the expectations and experiences Data Collection of several groups: potential customers, first-time buyers, and repeat purchasers. We will Design 5 determine if the lack of sales is due to (1) poor expectations that lead to a general lack of desire to buy, or (2) poor performance experience and a lack of desire to repurchase. Planning & Survey What then is the difference between a management problem and a research problem? Design 6 Management problems focus on an action. Do we advertise more? Do we change our advertising message? Do we change an under-performing product configuration? If so, Data how? Research problems, on the other hand, focus on providing the information you Collection 7 need in order to solve the management problem. Analyzing/ Interpreting Data 8 Research Report 96 MARkETINg R ESEARCH EXHIBIT 1.2 BASIC RESEARCH ISSUES As technology advances, marketing researchers continually look for ways to adapt new technology to the practice of research. However, researchers must never forget that research basics cannot be overlooked. Rather, what must be done is to adapt the new techniques and technologies to these basics. All studies must address the following basic issues (Anderson, Berdie, & Liestman, 1984): 1 - ASK THE RIGHT QUESTIONS. This is the essence of project design and the heart of proper planning. Every project is unique, and as such must be tailored to the user’s needs. 2- ASK THE RIGHT PEOPLE. The goal of sample design should be that only those people who are of interest to the researcher are contacted, and that those contacted are representative of the group of interest 3 - ASK QUESTIONS THE RIGHT WAY. It is not enough to be able to ask the right questions; they must be asked the right way. This is the essence of questionnaire design. If the wording of the questions is not clear to the respondents, the results will be useless. Pretesting the questionnaire is crucial for ensuring that responses are the ones that are needed. 4 - OBTAIN ANSWERS TO QUESTIONS. Data collection is central to all marketing research. The techniques used should minimize non-response while maximizing response. 5 - RELATE ANSWERS TO THE NEEDS OF THE RESEARCH USER/CLIENT. Data seldom speaks for itself. Proper data analysis is needed if a study is to have any value to the user. Here there is a risk of letting advanced techniques become the master of the researcher rather than the opposite. Common sense is a valuable tool for the researcher when considering alternative analysis approaches for any project. 6 - COMMUNICATE EFFECTIVELY AND IN A WAY THAT THE CLIENT UNDERSTANDS. Many good projects are ruined because the information that is reported to the user is in a form that is not understandable. Reports must tell the user what information is relevant, and how it is relevant to the issues at hand.MARkETINg R ESEARCH 7 Once you’ve created a research problem, you have to develop a research question. A research question gives your research direction. From the research question, a hypothesis or hypotheses can be formulated to guide the research. A hypothesis should include a statement about the relationship between two or more variables and carry clear implications for testing the stated relationship. For example, you might need to know if and how your customers’ positive and negative product expectations are confirmed or disconfirmed upon product use. HOW TO FORMULATE THE RESEARCH PROBLEM Problem formulation is simplified once we define the components of the research problem. 1. Specify the Research Objectives A clear statement of objectives will help you develop effective research. It will help the decision makers evaluate your project. It’s critical that you have manageable objectives. (Two or three clear goals will help to keep your research project focused and relevant.) 2. Review the Environment or Context of the Problem As a marketing researcher, you must work closely with your team. This will help you determine whether the findings of your project will produce enough information to be worth the cost. In order to do this, you have to identify the environmental variables that will affect the research project. These variables will be discussed in-depth in later chapters. 3. Explore the Nature of the Problem Research problems range from simple to complex, depending on the number of variables and the nature of their relationship. If you understand the nature of the problem as a researcher, you will be able to better develop a solution for the problem. To help you understand all dimensions, you might want to consider focus groups of consumers, sales people, managers, or professionals to provide what is sometimes much needed insight. 4. Define the Variable Relationships Marketing plans often focus on creating a sequence of behaviors that occur over time, as in the adoption of a new package design, or the introduction of a new product. Such programs create a commitment to follow some behavioral pattern in the future. Studying such a process involves: • Determining which variables affect the solution to the problem. • Determining the degree to which each variable can be controlled. • Determining the functional relationships between the variables and which variables are critical to the solution of the problem.8 MARkETINg R ESEARCH During the problem formulation stage, you will want to generate and consider as many courses of action and variable relationships as possible. 5. The Consequences of Alternative Courses of Action There are always consequences to any course of action. Anticipating and communicating the possible outcomes of various courses of action is a primary responsibility in the research process. Exhibit 1.3 provides an example of a company introducing a new product based on research that did not examine relevant variables in the consumer purchase decision. EXHIBIT 1.3 “NEW COKE” VERSUS ORIGINAL COKE In the mid-1980s, the Coca Cola Company made a decision to introduce a new beverage product (Hartley, 1995, pp. 129–145). The company had evidence that taste was the single most important cause of Coke’s decline in the market share in the late 1970s and early 1980s. A new product dubbed “New Coke” was developed that was sweeter than the original-formula Coke. Almost 200,000 blind product taste tests were conducted in the United States, and more than one-half of the participants favored New Coke over both the original formula and Pepsi. The new product was introduced and the original formula was withdrawn from the market. This turned out to be a big mistake Eventually, the company reintroduced the original formula as Coke Classic and tried to market the two products. Ultimately, New Coke was withdrawn from the market. What went wrong? Two things stand out. First, there was a flaw in the market research taste tests that were conducted: They assumed that taste was the deciding factor in consumer purchase behavior. Consumers were not told that only one product would be marketed. Thus, they were not asked whether they would give up the original formula for New Coke. Second, no one realized the symbolic value and emotional involvement people had with the original Coke. The bottom line on this is that relevant variables that would affect the problem solution were not included in the research. NEW AND CLASSIC COMMERCIAL NEW COKE COMMERCIAL R ESEARCH 9 STAGE 2: METHOD OF INQUIRY The scientific method is the standard pattern for investigation. It provides an opportunity for you to use existing knowledge as a starting point and proceed impartially. As shown in Exhibit 1.4, the scientific method includes the following steps: 1. Formulate a problem 2. Develop a hypothesis 3. Make predictions based on the hypothesis 4. Devise a test of the hypothesis 5. Conduct the test 6. Analyze the results The terminology is similar to the stages in the research process. However, there are subtle differences in the way the steps are performed. For example, the scientific method is objective while the research process can be subjective. Objective-based research (quantitative research) relies on impartial analysis. The facts are the priority in objective research. On the other hand, subjective-based research ( qualitative research) emphasizes personal judgment as you collect and analyze data. EXHIBIT 1.4 THE SCIENTIFIC METHOD In structure, if not always in application, the scientific method is simple and consists of the following steps: 1. OBSERVATION. This is the problem-awareness phase, which involves observing a set of significant factors that relate to the problem situation. 2. FORMULATION OF HYPOTHESES. In this stage, a hypothesis (i.e., a generalization about reality that permits prediction) is formed that postulates a connection between seemingly unrelated facts. In a sense, the hypothesis suggests an explanation of what has been observed. 3. PREDICTION OF THE FUTURE. After hypotheses are formulated, their logical implications are deduced. This stage uses the hypotheses to predict what will happen. 4. TESTING THE HYPOTHESES. This is the evidence collection and evaluation stage. From a research project perspective this is the design and implementation of the main study. Conclusions are stated based on the data collected and evaluated.10 MARkETINg R ESEARCH THE SCIENTIFIC METHOD, CONTINUED: A simple example will show how the scientific method works. Assume a researcher is performing a marketing research project for a manufacturer of men’s shirts: 1. OBSERVATION: The researcher notices some competitors’ sales are increasing and that many competitors have shifted to a new plastic wrapping. 2. FORMULATION OF HYPOTHESES: The researcher assumes his client’s products are of similar quality and that the plastic wrapping is the sole cause of increased competitors’ sales. 3. PREDICTION OF THE FUTURE: The hypothesis predicts that sales will increase if the manufacturer shifts to the new wrapping. 4. TESTING THE HYPOTHESES: The client produces some shirts in the new packaging and market-tests them. STAGE 3: RESEARCH METHOD In addition to selecting a method of inquiry (objective or subjective), you must select a research method. There are two primary methodologies that can be used to answer any research question: experimental research and non-experimental research. Experimental research gives you the advantage of controlling extraneous variables and manipulating one or more variables that influences the process being implemented. Non-experimental research allows observation but not intervention. You simply observe and report on your findings. STAGE 4: RESEARCH DESIGN The research design is a plan or framework for conducting the study and collecting data. It is defined as the specific methods and procedures you use to acquire the information you need. STAGE 5: DATA COLLECTION TECHNIQUES Your research design will develop as you select techniques to use. There are many ways to collect data. Two important methods to consider are interviews and observation.MARkETINg R ESEARCH 11 Interviews require you to ask questions and receive responses. Common modes of research communication include interviews conducted face-to-face, by mail, by telephone, by email, or over the Internet. This broad category of research techniques is known as survey research. These techniques are used in both non-experimental research and experimental research. Another way to collect data is by observation. Observing a person’s or company’s past or present behavior can predict future purchasing decisions. Data collection techniques for past behavior can include analyzing company records and reviewing studies published by external sources. In order to analyze information from interview or observation techniques, you must record your results. Because the recorded results are vital, measurement and development are closely linked to which data collection techniques you decide on. The way you record the data changes depends on which method you use. STAGE 6: SAMPLE DESIGN Your marketing research project will rarely examine an entire population. It’s more practical to use a sample—a smaller but accurate representation of the greater population. In order to design your sample, you must find answers to these questions: 1. From which base population is the sample to be selected? 2. What is the method (process) for sample selection? 3. What is the size of the sample? Once you’ve established who the relevant population is (completed in the problem formulation stage), you have a base for your sample. This will allow you to make inferences about a larger population. There are two methods of selecting a sample from a population: probability or non-probability sampling. The probability method relies on a random sampling of everyone within the larger population. Non- probability is based in part on the judgment of the investigator, and often employs convenience samples, or by other sampling methods that do not rely on probability. The final stage of the sample design involves determining the appropriate sample size. This important step involves cost and accuracy decisions. Larger samples generally reduce sampling error and increase accuracy, but also increase costs. You will find more on this important topic in Chapter 7. STAGE 7: DATA COLLECTION Once you’ve established the first six stages, you can move on to data collection. Depending on the mode of data collection, this part of the process can require large amounts of personnel and a significant portion of your budget. Personal (face-to-face) and telephone interviews may require you to use a data 12 MARkETINg R ESEARCH collection agency (field service). Internet surveys require fewer personnel, are lower cost, and can be completed in days rather than weeks or months. Regardless of the mode of data collection, the data collection process introduces another essential element to your research project: the importance of clear and constant communication. STAGE 8: ANALYSIS AND INTERPRETATION In order for data to be useful, you must analyze it. Analysis techniques vary and their effectiveness depends on the types of information you are collecting, and the type of measurements you are using. Because they are dependent on the data collection, analysis techniques should be decided before this step. STAGE 9: THE RESEARCH REPORT The research process culminates with the research report. This report will include all of your information, including an accurate description of your research process, the results, conclusions, and recommended courses of action. The report should provide all the information the decision maker needs to understand the project. It should also be written in language that is easy to understand. It’s important to find a balance between completeness and conciseness. You don’t want to leave any information out; however, you can’t let the information get so technical that it overwhelms the reading audience. One approach to resolving this conflict is to prepare two reports: the technical report and the summary report. The technical report discusses the methods and the underlying assumptions. In this document, you discuss the detailed findings of the research project. The summary report, as its name implies, summarizes the research process and presents the findings and conclusions as simply as possible. Another way to keep your findings clear is to prepare several different representations of your findings. PowerPoint presentations, graphs, and face-to-face reports are all common methods for presenting your information. Along with the written report for reference, these alternative presentations will allow the decision maker to understand all aspects of the project. RESOURCE PLANNING FOR YOUR STUDY As you are developing your study, you have to account for the expenditure of your resources: personnel, time, and money. Resource plans need to be worked out with the decision maker and will range from very formal budgeting and approval processes to a very informal “Go ahead and do it”. Before you can start the research project, you should get yourself organized and prepare a budget and time schedule for the major activities in the study. Microsoft Project and similar programs are good resources for breaking down your tasks and resources.MARkETINg R ESEARCH 13 SUMMARY We’ve introduced the research process and discussed some of the decisions that need to be made before you start your research project. We’ve also discussed how managers use research to help with decision-making. It’s important to build strong and frequent communication between team members, decision makers, and clients. As you develop your research project, you want to consult with the decision makers throughout the project, building a common understanding of exactly what is needed and is to be provided to assure success.Focusing Your 2 Research Design Your company has decided to create a smartphone app and the vice president has asked you to be the team leader. Your team’s assignment is to nurture the concept. When you meet with your VP next week, you will specify the kind of apps your company might develop, determine what the different apps might do, and focus on your target audience for each possible app. As your project matures, you understand how important it is to have a research design. Such a plan will guide your team and your company’s decision makers. It will lay out the methods and procedures you need to employ as you collect information. To develop a research design, you will rely on three types of studies: exploratory studies, descriptive studies, and causal studies. Each depends on different information that will help you. No matter how large or small your project, conducting surveys and establishing a research design is vital to your success. If you don’t know where your project is going, you won’t know if it’s succeeding. EXPLORATORY STUDIES First, you need to do an exploratory study. This is the problem finding phase. An exploratory study forces you to focus the scope of your project. It helps you anticipate the problems and variables that might arise in your project. Perhaps the most common problem is size. Your project must be kept focused. If the scope of a project is too big, it will not get off the ground. Too much information is overwhelming. An important objective of an exploratory study is keeping your project manageable. The larger your project’s scope, the more difficult it is to control. This process will help you weed out problems. In the case of developing an app, for example, an exploratory study would help your research team take an abstract idea and develop it into a focused plan. The specific app would be market-driven. This process takes legwork, but the results are worth the eoffrt.16 RESEARCH DESIg N Exploratory studies generally encompass three distinct methods: 1. Literature search 2. Expert interviews 3. Case studies LITERATURE SEARCH A literary search means you go to secondary sources of information: the internet, the public library, company or government records. These sources are usually easy and inexpensive to access. For example, your development team would search online. They would look at other kinds of apps on the market, the preferred phone to develop an app, the pricing of similar products, and any other information necessary to set parameters on their project. EXPERT INTERVIEWS After a literature search, your team would have a useful background for the project. They know what questions to ask and how to set up their project. After the literary search, the next step is to interview experts. These experts might include company executives or consumers. They would also talk to people who used similar products. Your team would seek out professionals who have careers relating to the research project. Your team knows that one effective way to gain information from experts is through focus groups. A focus group includes 6-8 individuals who share a common background (software development, market analysis, administration, dog breeding, fly fishing) who participate in a joint interview. The secret to a successful focus group is ignoring the traditional question/answer format. Instead, you encourage the free flow of ideas and discussion. CASE STUDIES Every research project will have pitfalls. Thus, case studies become a vital tool because they allow you to examine another business’s managerial problems and solutions. If another study deals with similar issues, you can avoid these pitfalls by learning from its mistakes. Case studies include histories of other projects and simulations of possible alternatives. A good “What if?” can save a lot of time and resources. DESCRIPTIVE STUDIES Who are you selling to? An exploratory study helped you establish what you are selling, but the descriptive study will help you find your market and understand your customer. Since you will not be able to sell to everyone, a descriptive study is necessary to focus your project and resources.

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