4.1: Market research

market research

gathering, presenting and analysing information regarding the marketing and consumption of goods and services

purposes of market research

- identify and understand customer needs
- identify gaps in the market
- to reduce risk
- to make informed business decisions

identifying and understanding customer needs

businesses are successful if they supply products that meet customer needs

how does identifying and understanding customer needs help a business?

it helps a business design products that meet the specific needs of the customer

how should businesses respond to the changing market?

businesses should be able to anticipate customer needs and respond quickly as trends change

identifying gaps in the market

businesses can identify untapped markets and spot a gap to gain a competitive edge

how does identifying gaps in the market help a business?

businesses can generate higher levels of revenue and profit before a competitor arrives

reducing risk

businesses can carry out effective market research as markets get larger to avoid failure when launching a new business or new products

how does reducing risks help a business?

it'll help avoid loss and costly product failure which can lead to a very high cost

making informed business decisions

the quality of a decision improves greatly by access to meaningful and detailed information, especially when marketing

what methods do businesses use to gather new information?

primary or field research

primary or field research

the gathering of new information which hasn't been collected before

advantages of primary data

- original
- needs adapted to business

disadvantages of primary data

- time consuming
- expensive

main methods for gathering primary data

- questionnaires
- focus groups or consumer panels
- observation
- test marketing

questionnaires

list of questions used to record views and opinions of respondents

what does a good questionnaire include?

- open and closed questions
- clear and simple questions
- not leading questions
- be short

different types of questionnaires

- postal surveys
- telephone interviews
- personal interviews
- online surveys

focus groups or consumer panels

used to obtain detailed information in which customers are invited to a discussion led by market researchers

advantage of consumer panels

cost effective

disadvantage of consumer panels

group of customers may be small so results may not be reliable and might be difficult to generalise

observation

market researchers watch customers and their behaviour

test marketing

selling a new product in a limited geographical area to evaluate sales before a national launch and modify using feedback

secondary or desk research

businesses collect existing information

two types of secondary data

internal and external

internal secondary data

exists inside the business organisation

external secondary data

exists outside the business organisation

advantage of secondary data

quicker and easier to gather

disadvantage of secondary data

may be inaccurate and out of date

examples of secondary research

- business websites
- competitors
- media
- internal data
- government publications
- commercial publications

qualitative data

information about attitude, beliefs and intentions usually either written down or recorded

quantitative data

expressed in numbers and can be measured

role of social media in collecting market research data

social media provides a cheap way of gathering information about a firm's customers, market, brand appearance and other market issues

how does social media help in collecting market research data?

by searching the latest posts and popular terms it is easy to gain some understanding of emerging trends and see what customers are talking about

advantages of using social media for market research

- broad reach
- specific targeting
- low cost
- personal
- fast
- easy

importance of reliability of market research data

decisions based on data won't be sound if the data is out of date or inaccurate

how do businesses ensure reliability of market research data

businesses use a sample of people that represent a proportion of the entire market