market research

market research

Market research is the systematic collection, collation, analysis and evaluation of information on the buyers and sellers in a market which is intended to assist the firm in the marketing process. Market Research reduces the risk of introducing new products or modifying existing products by seeing if they are likely to meet customer expectations.

The Reasons for Market Research.

To identify markets. This allows a firm to see if there will be a market and who their target market will be.

2. To gain a more detailed understanding of consumers’ needs – to discover consumers’ opinions on a huge range of issues. This can enhance communications and allow a business to understand better what consumers want.

3. To reduce the risk of product/business failure

4. To forecast future trends – Firms can then make the necessary adjustments to their product portfolios and levels of output in order to remain successful.

Advantages and Disadvantages of Using Primary Research.

• Can aim questions directly at your research objectives.

• Can gain the latest information from your marketplace and gain a competitive advantage.

• Can find out why customers act in a particular way.

• Only you have access to the results.

• expensive

• time consuming which is a problem in fast changing markets

• needs other data to compare it with

• inaccurate or biased

Advantages and Disadvantages of using Secondary Research.

• quicker to complete than primary research

• inexpensive

• sources are available online so results can be checked for

  accuracy

• available to competitors

• cannot verify the accuracy

• may be out of date,

• may be biased

• may not be relevant to the Northern Ireland economy

Face To Face.

- Higher response rates and more accurate responses

 Researchers can clear up misunderstandings

 Gain views on a wide range of issues about the product

 Helps the firm to improve customer experience in the future

Time consuming and expensive

 Hidden bias in choice of respondents

 Small sample reducing the validity of the results

Telephone Questionnaire.

Low cost

 A business can cover a large geographical area so sample can be more

representative

 People are sometimes more willing to answer questions over the telephone

 A business can obtain the results much faster from a telephone survey

Negative reaction of respondents

 Not everyone has a telephone or has their number listed so results are not

truly representative of the population

 Telephone interviews are restrictive as you could not use images or

photographs of the product

Postal Questionnaire.

Low cost

 Large geographical area can be covered

 Respondents can research answers

 No interviewer bias

 Not sure who the respondent is

 No one can clarify things

 Low response rates

E-Survey.

Target specific individuals

 The business could send it out and receive replies very quickly

 The business would save money over printing and postage on traditional

questionnaires

 It is very cheap to send out large numbers of questionnaires

 Low response rates

 Less secure

 Sample may not be representative since not everyone has an e-mail account

or access to the internet

Advantages and Disadvantages of Questionnaires

Gain valuable information from the respondents to help make decisions

 Cost Effective

 Can gain quantitative and qualitative information depending on the questions

asked

 Standardised format in that everyone gets asked the same questions

 Dishonest answers

 Low Response Rates

 Inaccuracy in analysing open ended questions

focus groups

This is a form of qualitative research where a group of individuals are asked to share their views on a particular product or market. They normally contain between 6 and 10 people and are from the relevant market segments.

Results can be gained in a short period of time

 Provide explanations as to why people respond in a particular way

 This would help the business in the development of new products

 This can be useful in helping the business to analyse why people prefer

particular things

 It allows a business to enhance customer experience

Small scale so the results might not be representative

 The business may have difficulty analysing results due to their qualitative

nature

 Sometimes the results in a focus group can be biased depending on the

researcher who is leading the discussion or dominant members of the group.

The business needs to ensure researchers are properly trained.

 Can be expensive

consumer panels

a group of people who form part of a market segment. They are asked to contribute thoughts and feelings about a product or service, in many cases through an interview process.

Used as a pilot for a full marketing campaign

 Strong qualitative information

 Members of the panel become confident and experienced

 Time consuming and costly

 Small scale therefore may not be representative

 Results are difficult to analyse

test marketing

trialing a product on a section of the market before launching it onto the mass market. Results are reviewed carefully and extrapolated as representative of the population.

Reduces the chances of wasting resources

 Provides valuable quantitative and qualitative information

 Representative due to the geographical area used

 Gives information to competitors

 If it fails then it is time consuming and costly

 Large expenditure has already been undertaken

 Difficult to replicate the anticipated experience expected from the new

product/service when launched

interviews

This is similar to face-to-face surveys but involves pre-determined people. They are designed to gain qualitative rather than quantitative information.

Detailed qualitative research is gathered

 In depth answers

 Respondents are not influenced by others

 Time consuming and expensive

 Small samples therefore may not be representative

 Interviewer bias could be a problem

observation

Customers are invited to sample/use a range of products/services that the business provides. The business then observes, notes and discusses the customers’ behaviour and responses in order to gain an in-depth analysis of their views.

It yields a ‘live’ experience

 Accurate results

 No bias

 Inform a business what they should do in the future

 Time consuming and expensive

 Analysing results may be difficult

 No interaction

 Ethical considerations about not knowing you are being filmed

store loyalty cards

form part of a loyalty programme that a business may operate. Through consumer using their card the business can collect data and build customer profiles, enabling the business to better understand customer needs and buying behaviour.

Large quantities of accurate information

 Trends can be identified so resources can be targeted

 Easy to run

 Encourages increased spending

 Helps the business plan for the future

 Expensive to set up

 Expensive to run as the customer is expecting a reward

 No qualitative information

surveys

A survey is a method of finding out a respondent’s view on a specific issue. It allows the business to gather information from target markets, with the aim of gaining a better understanding of the needs of the target audience.

It gives the business access to a wider range of information.

 It is cheaper if it has been carried out by someone else.

 The results obtained may not be entirely accurate due to the existence of bias

in the wording of questions.

random sampling

Samples are chosen from a population either by using a random number table or a random number generator. Each member of the population has an equal, independent and known chance of being selected.

Easy and quick to implement therefore benefit from first mover advantage

 Free from bias

 May be easier to carry out random, rather than quota sampling

 Less information is required

Minority subgroups within the population may not be present in sample

 Assumes that all customers are equally important so less useful when dealing

with products aimed at specific market segments

 Can lead to bias if the sample set is not large enough to be representative of

the whole population. For example, customers sampled may all be male.

 May need a larger sample to ensure that it is representative of the population

stratified sampling

The population is divided into subgroups based on specific characteristics, such as age, gender or race. Within the strata random sampling is used to choose the sample.

Strata can be proportionally represented in the final sample

 It is easy to compare subgroups

 Reduces selection bias

 Information must be gathered before being able to divide the population into

subgroups

 It is unusable when researchers cannot confidently classify every member of

the population into a subgroup

cluster sampling

Data is divided into clusters and random sampling is used to select whole clusters. It is usually used with naturally occurring groups of individuals for example classrooms or postcodes.

Cuts down the cost and time by collecting data from only a limited number of

groups.

 Can show grouped variations

 Don’t need complete population information

 It is not a genuine random sample

 The sample size is smaller and from thus the sample is likely to be less

representative of the population

 Cluster sampling is much more complex to plan than other forms of sampling.

quota sampling

Quota sampling is a non-probability sampling technique in which researchers look for a specific characteristic in their respondents, and then take a tailored sample that is in proportion to a population of interest.

Relatively easy to administer

 Can be performed quickly

 Cost-effective

 Results are more suited to the firm’s needs as those sampled are specifically

chosen. For example, according to socio-economic grouping.

 The sample should be representative of a firm’s customer base

 Useful where the proportions of the population with various characteristics are

known. A business may record customer detail when sales are made, to be used

later.

There is a potential for selection bias,

 Can be very expensive as a business may have to employ a market research firm to carry out such a sample.

 A business will find it time consuming as customers from each group must be found.

 Samplers may be tempted to cut corners to speed up the process. As mentioned previously, it’s best for researchers to try to use stratified random sampling instead of quota sampling.