Market research

How is human behaviour a limitation of market research?

Views and responses change over time and markets are unpredictable - trends change quickly.

What is a limitation of market research regarding sampling and bias?

It is almost impossible (unless you have a tiny target market) to sample everyone.

It’s therefore important to consider if the sample is representative of the population.

What can be misleading regarding market research?

Questions can be misleading and interviewers can influence people to respond in certain ways.

Name 2 internal sources of market research.

• Financial records.

• Loyalty cards.

How are financial records used as market research?

• Annual accounts e.g. trends in profit or losses, cash flow.

• Whole company and divisional performance e.g. product lines or branches.

How are loyalty cards used for market research?

• Data on individual customers e.g. frequency of shopping and popular items.

• Identify lifestyle choices.

What must businesses consider to overcome limitations?

• Validity.

• Reliability.

• Appropriateness.

• Currency.

• Cost.

What is validity?

Has the research been collected by a valid source?

What is reliability?

Are findings reliable? Is there any chance there was bias?

If research is repeated, results would be similar.

What is appropriateness?

Have appropriate methods of data collection been used for the information we are trying to gather?

What is currency?

Is the data collected up to date?

Some past data might be collected to show trends, but other elements must be up to date.

What is cost?

Is the cost of the research worth the findings you will gather?

What is qualitative research?

The gathering of non-statistical information that gives a company in depth insight into reasons for human behaviour.

What is quantitative research?

The gathering of statistical data to inform the company about people’s behaviour but does not identify the reasons.

What is a questionnaire?

A series of short open and closed questions asked to existing or potential customers.

Can be postal, telephone, face-to-face or online.

Primary research.

What is an interview?

Primary research.

A two way process of asking more open questions and follow up questions.

Give some benefits of interviews.

Allows for a greater depth of understanding into the reasons for consumer behaviour and attitudes.

What is a focus group?

Primary research.

Collecting feedback from a group of people who try and product and then discuss opinions. Usually an experienced marketer will lead the focus group to ask structured questions.

Give a benefit of using focus groups.

Focus group can be led to ask structured questions, fascilitate discussion and try to reduce bias.

What is observation?

Primary research.

Watching the actions of consumers e.g. routes taken around a store, eye positioning.

Give a benefit of observation.

• Can count footfall e.g. number that walk past and % that enter at times of day.

• Learn characteristics of shoppers e.g. age, gender.

Give a drawback of observation.

Provides quantitative data only, not any understanding of the reasons for behaviour.

What is a trial?

Primary research.

Testing a product either during or after development to a small section of the market.

Feedback from a test market can be used to inform decisions before a rollout is carried out.

What is use of customer data records for market research?

Secondary research.

• Customer profiles e.g. age, occupation.

• Feedback from past sales surveys.

• How they heard of you, use of promotions e.g. coupons.

Give some benefits of using customer data records.

• Low cost - already exist so businesses do not need to spend on collecting.

• Time-efficient - already available, meaning businesses can analyse information quickly.

Give some drawbacks of using customer data records.

• Data may be outdated. Customer preferences change over time, so old records may no longer reflect current market trends.

• Lack of insight into customer motivations. Data shows what customers bought but not why.

What is use of past sales figures?

Secondary research.

Trends by day, week, month and year, and popular and less popular products.

Give some benefits of using past sales figures.

• Helps identify trends and patterns. Can see changes over time, such as seasonal demand and trends, helping forecast future demand.

• Sales figures based on actual customer purchases rather than opinions, making data more accurate and useful for decision making.

Give 2 drawbacks of using past sales figures.

• May not reflect future demand. Market conditions, competition and trends can change, so can lead to inaccurate forecasts.

• Doesn’t explain customer behaviour. They show what sold, not why, meaning businesses lack insight into customer attitudes and motivation.

How are trade journals used for market research?

Industry-specific magazines or publications that provide information about market trends, competitors, new products and industry performance.

Secondary research.

Give 2 benefits of using trade journals.

• Up to date industry information. Helps businesses keep track of trends and changes in the market.

• Low cost and easily available. Often cheaper and quicker than carrying out primary research.

Give 2 drawbacks of using trade journals.

• May be too general - information is not tailored to one business or specific market.

• Possible bias - articles may be influenced by advertisers or industry opinions.

What is the use of government statistics for market research?

Secondary reseach.

Official data collected by governments (e.g. population, income, employment) used to analyse markets and economic trends.

Give 2 benefits of using government statistics.

• Highly reliable - collected using large samples and official methods, so data is usually accurate.

• Large scale data - covers whole regions or countries, useful for spotting trends and market size.