Value of primary and secondary market research

What is market research?

• the systematic and objective collection analysis and evaluation of information that is intended to assist the marketing process

What is primary market research?

• collection of information gathered first hand of the specific purpose of the initial user

• Surveys, focus groups, test marketing, experiment

What are the benefits of primary market research?

• experiment-

  • relatively cheap

  • Considers actual customer behaviour rather than opinions given in a questionnaire

• Observation

  • examines customer behaviour in detail

  • Can reveal problems

• Focus groups

  • can gather information on why customers react the way they do and can help modify the products

  • Can help uncover new ideas on how to market products or services

• Surveys

  • a wide range of info can be obtained

  • Cheap

  • Avoid bias if a postal interview

What are drawbacks of primary market research?

• experiment

  • consumer behaviour may not be the same through the country

  • May delay the introduction of a potentially successful strategy

• observation

  • expensive to employ specialist psychologists to observe relatively limited behaviour

  • Shows what is happening rather than why it is taking place

• Focus groups

  • sometimes an element of bias

  • Expensive to operate

• Surveys

  • can be time consuming

  • Response rates can be low

  • May not be representative

  • Sample can be biased towards people with a particular interest in the product or service

What is secondary market research?

• information that has already been collected for a different purpose

• Government publications, newspapers, magazines, company records, competitors, market research organisations, loyalty cards, internet

What are the benefits of secondary market research?

• the information is already available so quick decisions can be taken biased upon it

• It is cheaper than primary research

• Secondary surveys are often conducted regularly so the info obtained is particularly helpful in identifying trends overtime

What are the drawbacks of secondary market research?

• the info may be dated and therefore could be misleading

• Since the info is available to other organisations it is unlikely to give the business any advantages over its competitors

• There may be no relevant secondary data to meet the specific needs of the business

• As the data are collected by other organisations for their own use the secondary user won’t know the level of accuracy and reliability of the data consequently there is a danger that over reliance on the data could lead to poor marketing decisions

What is qualitative market research?

• collection of information about the market based on subjective factors such as opinions and reasons

What are benefits of qualitative market research?

• can gain a greater insight into what a business needs to do to appeal to its customers

• Can highlight issues what the business was not aware of

• Can give detailed insights into customers thinking processes when they buy products

What are the drawbacks to qualitative market research?

• it is expensive- so is usually collected in small groups which can lead to bias or unrepresentative opinions

• Difficult to tabulate the data and compare it with other data

What is quantitative market research?

• collection of information about the market based on numbers

What are the benefits of quantitative market research?

• summaries data into a concise and meaningful way

• Makes it easier to compare results with those of other organisations such as competitors or other divisions of the same organisation

• Can be used to identify trends and project future trends

What are the drawbacks of quantitative market research?

• only shows what feather than explaining why

• Can lack reliability and validity if the sample is biased or too small

How do you calculate market growth?

(Change/original) x 100

How do you calculate market share?

• (sales of one product/total sales in the market) x 100

how do you work out sales growth?

(Change/original) x 100

Who do you work out market size?

(Sales/market share)x 100