Market research

What is market research?

The process of gathering primary and secondary data on the buying habits, lifestyles, usage, and attitudes of actual and potential customers.

What are the general benefits of market research?

Identifies opportunities and threats, monitors sales after promotions, helps solve problems, identifies target markets, reduces risk of failure.

What are the general drawbacks of market research?

Doesn't guarantee success, time-consuming and costly, can be unreliable or biased, may rely too heavily on consumer responses.

Why do businesses carry out extensive market research?

Aids decision-making, understands customer wants, helps develop or modify products, determines pricing strategies, keeps pace with competitors, predicts trends, reduces risk.

Why might businesses choose not to carry out market research?

Predictions may be inaccurate, sampling may be biased, secondary data may be outdated or irrelevant, primary data collection can be expensive and time-consuming.

Why is understanding the marketplace important?

Because launching new products is costly, maintaining market share is essential, and businesses must protect brand reputation.

What is primary research (field research)?

Collecting new, first-hand data for a specific purpose (e.g. questionnaires, interviews, surveys, focus groups).

Advantages of primary research?

Exclusive to the business, up to date and relevant, targeted for specific needs.

Disadvantages of primary research?

Expensive, time-consuming, can contain bias.

What is secondary research (desk research)?

Using existing information collected by others (e.g. reports, databases, online sources).

Advantages of secondary research?

Inexpensive and quick, allows analysis of multiple data sources.

Disadvantages of secondary research?

Often outdated, limited control over quality, possible misinterpretation.

What is quantitative research?

Collecting measurable, numerical data (e.g. surveys, sales figures, statistics).

Key points of quantitative research?

Objective, researcher knows what they’re looking for, used in later stages, produces statistical data.

What is qualitative research?

Collecting data about attitudes, beliefs, and motivations (e.g. interviews, focus groups, observations).

Key points of qualitative research?

Subjective, used in early stages, time-consuming, produces descriptive non-numerical data.

How is marketing linked to other departments?

HR: staff and skills; Production: what and when to produce; Finance: forecasts and revenue; Purchasing: raw materials; Transport: logistics and distribution.

What is a sample in market research?

A group of respondents chosen to represent the target market as a whole.

Why is sample size important?

Must be large enough for accuracy; too large = costly; too small = inaccurate; large firms have cost advantages.

What is quota sampling?

Population divided into groups (e.g. age, gender) and a set number from each group is interviewed.

Advantages of quota sampling?

Cheaper and faster than random sampling.

Disadvantages of quota sampling?

Not statistically representative because it is not random.

What is random sampling?

Every member of the population has an equal chance of being selected.

Advantages of random sampling?

Reduces bias, statistically valid results.

Disadvantages of random sampling?

Expensive and complex to achieve, requires large sample and time investment.

What is bias in market research?

When one subgroup is overrepresented, leading to distorted or inaccurate results.

How can bias be avoided?

Use random or quota sampling and ensure sample accurately represents the population.