4.4 Market research

Market research

Marketing activities designed to discover the opinions, beliefs + preferences of potential + existing customers.

Ad-hoc market research

MR conducted as + when required in order to deal with a specific problem or issue

Continuous market research

MR conducted on an ongoing basis

Purpose of market research

1. Give businesses up to date info

2. Allow businesses to improve their marketing strategy

3. Assess customer reactions to new products (test on small groups)

4. Give better understanding of strategies used by competitors

5. Help predict future trends

What does market research reduce the risk of?

Failure

Primary MR

Gathering new data for a specific purpose, first-hand

4 methods of primary market research

1. Surveys

2. Interviews

3. Focus groups

4. Observations

Pros of primary MR

1. Relevant

2. Up to date

3. Confidential + unique

Cons of primary MR

1. Time consuming

2. Expensive

3. Lack of validity → misleading / biased results

Survey (questionnaire)

Document that contains a series of qs used to collect data for a specific purpose

Most common method of primary research

Surveys

Types of surveys

1. Self-completed

2. Personal

3. Telephone

4. Online

5. Postal

Effective survey design

1. No bias → collect meaningful info

2. No jargon → respondents fully understand

3. Include closed + open ended questions → quanti + qualitative answers

4. Test survey w small group → identify errors

5. Avoid unnecessary qs → gather only relevant data

Pros of surveys

1. Generate quali + quantitative data

2. Simple

Cons of surveys

1. Expensive

2. Time-consuming

   • Need large sample to get representative findings

Interviews

Type of PR that involve discussions betw an interviewer + interviewees to investigate their personal circumstances, preferences, opinions.

Pros of interviews

1. Beliefs, attitudes, feelings can be examined in detail

2. Interviewer can clarify confusion

Cons of interviews

1. Qualitative info difficult to analyse / extrapolate

2. Time consuming

3. Huge scope for interviewer bias

Focus groups

• Forming small discussion groups to gain insight into the attitudes + behaviour of respondents

• Group made up of participants who share a similar customer profile

When is a focus group commonly used?

When a business plans to launch a new product

• Asked about pros / cons

• Gve feedback on prototype

Pros of focus groups

1. Can ask detailed questions

2. Can use same participants for ongoing MR → saves time

3. Participants = targeted consumer groups = useful for conducting MR that needs specialist knowledge

Cons of focus groups

1. Discussion dominated by opinions of extroverts

2. Tendency for participants to conform to the majority view

3. Expensive- need to pay participants

Observations

• PR method

• Watch how people behave or respond in different situations

Conditions observations can occur under

1. Controlled- lab setting

2. Real life- ppl dk they are being observed

Pros of observations

Records actual behaviour rather than what people say they would do (interviews, surveys)

Cons of observations

Doesn’t show why people behave or respond in the way they do

• Need to ask them

Secondary MR

Collecting secondhand data + info that already exists, previously gathered by others

5 methods of secondary market research

1. Market analyses

2. Academic journals

3. Government publications

4. Media articles

5. Online content

Internal vs external sources of secondary MR

1. Internal

   • Gathered by the organisation itself (eg sales records)

2. External

   • From outside the business

Market analysis

• Secondary MR

• Reveals the characteristics, trends + outlook for a particular product or industry

  • Eg market size / share/. growth rate

What can market analysis help measure?

How well a business is doing compared with its rivals

Where can market analysis data be obtained from?

1. MR firms

2. Competitors

   • Eg annual reports

3. Trade publications

Pros of market analysis

Can access relevant, detailed, up to date market data, trends, forecasts

Cons of market analysis

1. Expensive (need to pay for it)

• Data available to those who pay for it

2. Can become outdated quickly

Academic journals

Periodical publications from educational + research institutions that publish data + info relating to a particular academic discipline

• Publish peer-reviewed findings

Pros of academic journals

1. Reliable source bc peer reviewed

2. Up to date research in an academic discipline

Cons of academic journals

1. Info not always relevant to researcher, outdated quickly

2. Contestable findings

Government publications

• Secondary MR

• Official documents + publications released by government entities + agencies

Example of data in government publications

1. Population census

2. Social trends

3. Labour market developments

4. Trade statistics

5. Unemployment figures

6. Inflation rates

Pros of government publications

1. Comprehensive, reliable statistics

2. Cover wide range of topics

3. Free of charge

Cons of government publications

Difficult to identity + locate info required

Media articles

• Documents (articles) in print or online media.

• Written by skilled journalists + authors

  • Eg newspapers, magazines

Pros of media articles

1. Released frequently → up to date info

2. Online + mostly free

Cons of media articles

1. Bias from reporters

2. Out of date, hence irrelevant, quickly

Online secondary MR

Sources available on the Internet for research purposes

Pros of online content

1. Readily available

2. News easily spread

Qualitative MR

• Getting non-numerical responses from research participants

• Aim: to understand their behaviour, attitudes, opinions

Pros of qualitative research

1. Better to exploring behaviours + attitudes of respondents

2. Flexible process → in-depth, more valuable info gathered

3. Cost effective (small no. participants)

4. No pressure to conform to the majority view → representative answers

Cons of qualitative research

1. Small sample size → unrepresentative findings of whole population

2. Time consuming to conduct + interpret

3. Need high level of interview expertise to encourage respondents

4. Interviewer bias → lack of validity

Quantitative market research

Collect + use factual + measurable info rather than people's perceptions + opinions

• Numerical data

2 quantitative techniques in primary MR

1. Closed q

   • Choose from list of options

2. Likert scale

   • Rank options

Population

All potential customers of a particular market

Sample

A selected group / proportion of the population used for primary MR purposes

Sampling

• PR technique

• Selects a sample of the population from a particular market for research purposes

3 sampling methods

1. Quota

2. Random

3. Convenience

Quota sampling

Use a certain no. of people (quota) from different market segments for primary MR purposes

How is the sample generated for quote sampling?

According to shared characteristics

• Age

• Gender

  Occupation

Pros of quota sampling

1. Can collect representative sample quickly

2. Findings more reliable than

   random sampling

Cons of quota sampling

Sample not always representative of the population

• Bc of the no. of people interviewed

  for each segment + how randomly they were selected

Sampling errors

• Caused by mistakes made in the sample design

  • Eg:

  • Unrepresentative sample

  • Sample size too small

Random sampling

Everyone in the population has an equal chance of being selected for the sample

Pros of random sampling

1. Easy to select a sample

2. Minimises bias or unrepresentative

   samples

Cons of random sampling

Indiscriminate

• May select people who aren’t part of the target group due to the randomness of selection

How to overcome indiscriminate nature of RS?

• Need large enough sample sizes

• So can get representative + meaningful results

Convenience sampling

• Uses research participants who are easy (convenient) to reach

• Relies on the ease of reach bc of the convenient availability of volunteers

Pros of convenience sampling

1. Cheap

2. Quick data collection

Cons of convenience sampling

Inadvertent exclusion of a large proportion of the population

• → presents highly skewed findings + unrepresentative