Business Paper 1 - Market Research (104)

Market Research (Advantages + Disadvantages) + Depends on…

process of gathering primary and secondary date about the buying habits, lifestyles, attitudes and usage of actual and potential customers

Advantages:

• discovers what customers are willing to pay (developing pricing strategy)

• keep pace/exceed competitors

Disadvantages:

• how much can a business afford?

• can it be trusted?

• is it accurate?

• subjective?

• time delay (how quickly do you need it?)

Value of carrying out Market Research

• discovers the needs of customers

• established product life cycle stage

• assess effectiveness of previous promotion campaigns

Primary Research (Advantages + Disadvantages)

gathers first-hand information - data gathered is new and directly relevant to the needs of the business e.g. questionnaires, interviews, focus groups (small groups asked on their opinion)

Advantages:

• only available to the business allowing them to gain market advantage over rival firms

• targets specific consumer needs

• up-to-date information

Disadvantages:

• costly and time-consuming compared to secondary research — market may have already changed in terms of taste

Secondary Research (Advantages + Disadvantages)

involves the use of previously-collected information that is not specifically gathered for the business but instead has been adapted for its use e.g online desk research (information online), official publication (government statistics)

Advantages:

• can be inexpensive and quick to obtain

• cost-effective analysis of several data resources

Disadvantages:

• often out of date

• it may be unavailable

Qualitative Data

data referring to the attitude, opinion, motives, beliefs and intentions e.g. customer reviews

Quantitative Data

numerical data that can be statistically analysed

Sampling

when researchers take a selection of the population who are representative of the whole population e.g quota and random

Quota Sampling

involves population being segmented into specific groups with same characteristics and a number selected from each group

Random Sampling

subset of statical population where every member of the population has an equal chance of being interviewed

Bias

something that causes data within a sample to be weighted towards one side — bias occurs when one subgroup outweighs another in a smaple

What does bias do?

• data may be invalid and unreliable

• misleading and negatively affects the success of the business

• to avoid bias, you can use quota and random sampling

Sample Sizes

• sample size is very large - research takes a long time + is expensive

• sample size is too small - increase chance that random factors will make results inaccurate

• gives larger businesses an advantage compared to smaller businesses as they have bigger market budgets (good example of economies of scale)