1.1.2 Market research

What is market research

It involves the gathering and analysis of research to help support the implementation of marketing strategy

Product orientation

Business develops products while focusing heavily on design, quality and performance of products, rather than what consumers actually want

Market orientation

when a business focuses heavily on selling products that match customer preferences. businesses respond to customer needs and wants and design products accordingly

Primary market research

data collected first hand for a specific research purpose

Secondary market Research

Data that already exists and has been collected for a different purpose

way of collecting primary market research

• focus groups

• observation

• surveys

• interviews

• test marketing

• experiments

ways of collecting secondary market research

• published market research reports

• google

• official statistics

• media reports

• competitors materials

Benefits and drawbacks of primary market research

• BENEFITS:
  - directly focuses on research objectives
  - kept private - not public
  - more detailed insights - particularly into customer views

• DRAWBACKS:
  - time-consuming and costly
  - risk of survey bias
  - sampling may not be representative

Benefits and drawbacks of secondary market research

• BENEFITS:
  - often free and easy to obtain
  - good source of market insights
  - quick to access and use

• DRAWBACKS:
  - can quickly become out of date
  - not tailored to business needs
  - specialist reports are often expensive

Quantitative data

• produces numerical statistics - facts and figures

• based on larger samples is more statistically valid

• questions such as ‘how many”, ‘how often” - closed questions which can be statistically analysed

• common methods are survey and forms

Qualitative data

• based on opinions, attitudes, beliefs and intentions of consumers and doesn’t produce numerical results.

• answers questions like ‘why’, ‘would’ or ‘how’

• aims to understand why customers behave in certain ways or why/how the may respond to a new product

• questions are open

• and allow for more informative responses.

• common methods are focus groups and interviews

benefits and drawbacks of quantitative research

• BENEFITS:
  - data is easy to analyse
  - numerical data provides insights into relevant trends
  - can be compared with data from other sources e.g. competitors, history

• DRAWBACKS:
  - focuses on data rather than explaining why things happen
  - doesn’t explain reasons behind trends
  - may lack reliability if sample size and method is not valid

benefits and drawbacks of qualitative research

• BENEFITS:
  - essential for product development and launches
  - focuses on understanding customer needs, wants, and expectations
  - can highlight issues e.g. why customer don’t buy
  - effective way of testing the marketing mix

• DRAWBACKS:
  - expensive to collect and analyse
  based around opinions - sample may not be representative

Sampling in market research

involves gathering data from a sample of respondents, the results of which should be representative of the population (e.g. target market) as a whole

benefits and drawbacks of sampling

• BENEFITS:
  - even a relatively small sample size can provide useful research insights - as long as representative
  - using sampling before decision making can reduce risk and costs
  - sampling is flexible and relatively quick

• DRAWBACKS:
  - if sample is unrepresentative, conclusions may be incorrect
  - risk of bias in research questions
  - less useful in market segments when customer tastes and preferences are changing frequently

IT to support market research - websites

• use own website to gather data:
  - conduct surveys
  - analyse activities of people using the site e.g. time of day/year, who uses the websites, how likely is it that they will buy

• can look at competitor websites to gather information

• can read reviews about their products from thier site and others e.g. amazon. however have to be cautious as people often leave reviews if they’re unhappy - may be representative

• however data gathered from own website may not be that useful. e.g. doesn’t say why customers did’nt buy something

IT to support market research - social networking

• use of internet-based platforms to make connections with people, through well know platform e.g. instagram, or more niche sites specific to product

• firms can post content and monitor the responses they get, allows them to find out people’s thoughts on their products and competitors - quick cheap way to carry out market research

• Platforms can be used to track current trends e.g. the use of hashtags

• limitation: not all consumers use the same networks so market research may produce different results depending on the site used

IT to support market research - databases

• businesses can collect their own data to form a database about their products and consumers e.g. loyalty cards which give customers money back, allow business to to get information such as name, address and preferences

• firms can also use other databases as a source of secondary research. They are usually accessed online for a fee and can provide information about the trends, businesses and consumers in a particular market. they are quick and cheap, but mostly quantitative so don’t give that much info on consumer opinions

Market segmentation

• dividing a market into groups of buyers.

• helps a firm to segment a market by revealing more about the types of consumers in the market

• each segment of consumers has different wants and needs, and so requires a different marketing mic

• allows a business to target their marketing towards specific groups

• helps to identify segments of a market whose needs and wants aren’t being met

Types of market segmentation

• demographic
  - age
  - gender
  - socio-cultural status
  - culture

• Geographic
  - regions
  - cities

• income
  - higher
  - lower

• behavioural
  - usage frequency
  - brand loyalty
  - lifestyle