5E - Market research practices

What is market research?

Market research is the process of investigating and analysing the activities and behaviours of customers and competitors in a specific industry.

What are the three steps in the market research process?

- Define the problem

- Collect the required data

- Analyse and interpret the data.

What occurs when a business defines the problem?

The business identifies what problem needs to be solved and the purpose of the research. For example, it may investigate whether there is demand for a potential product.

What occurs when a business collects the required data?

The business determines what type of data needs to be collected and implements appropriate techniques to gather it

What is primary data?

Primary data is information collected for the first time by a business for its research purpose.

What is secondary data?

Secondary data is information that has already been collected for another purpose.

What is quantitative data?

Quantitative data is information that can be measured using numbers and figures.

What is qualitative data?

Qualitative data is descriptive and non-numerical information.

Why might a business collect secondary data before primary data?

Secondary data can save time and money because it has already been collected. In some cases, secondary data may be sufficient and further research may not be required.

What is a survey?

A survey involves asking questions to collect data from a group of people. Surveys can collect quantitative and/or qualitative data and may use multiple-choice or open-ended questions.

What is observation as a primary data collection technique?

Observation involves watching customer actions and behaviours before and during purchases. It can provide quantitative and/or qualitative data.

What is experimentation?

Experimentation provides quantitative data and helps a business determine which specific factors lead to a purchase. For example, a business could test two different packages and compare sales.

What is a focus group?

A focus group is a small group of people reflecting the demographics of a business's target customers who discuss their opinions and beliefs in response to open-ended questions. It provides qualitative data.

What are company records as a source of secondary data?

Company records contain information already collected by the business, such as sales records. They provide quantitative data and can be used to identify trends in customer sales.

How can internet searches be used in market research?

Internet searches can provide quantitative and qualitative data about a particular industry, market and competitors. The information is published by sources external to the business.

How can government agencies be used for market research?

Government agencies provide quantitative data relevant to market research. The textbook gives the Australian Bureau of Statistics (ABS) as an example.

What can market research tell a business?

It can provide information about:

- potential market changes and new trends

- customer preferences, attitudes and behaviours

- needs of potential customers

- effectiveness of a new product

- effectiveness of marketing

- degree of competition.

What is data analysis?

Data analysis involves examining collected data to identify key findings and draw meaning from it. Data may be edited for quality and transformed into tables and graphs so it can be interpreted more easily.

What is data interpretation?

Data interpretation involves examining analysed data to determine why customer attitudes have changed or why particular market trends exist.

Why are data analysis and interpretation important?

They allow a business to make informed decisions, such as whether to launch a product, target a new market or change existing offerings. Effective decisions can improve competitiveness, performance and achievement of business objectives.