4.4 Market Research

market research

market research

refers to marketing activities designed to discover the opinions, beliefs, and preferences of potential and existing customers

role of market research

• gives businesses up-to-date information

• helps firms to tailor their market mixes for their target segments

• assesses customer reactions to products

• helps firms understand the activities and strategies used by their rivals

• helps firms understand trends for the future

ad hoc

takes place on an “as and when necessary” basis (specific marketing problems or issues)

continuous

regular and ongoing basis

primary research

involves gathering news data first-hand for a specific purposes; Often used to gather info from customers to identify their buying patterns and to anticipate changes in the market

surveys/questionnaire

is a document that contains a series of questions used to collect data for a specific purpose

surveys should…

• avoid bias

• avoid jargon

• include both closed and open-ended questions

• be tried and tested

• gather only necessary data

interviews

involves one-to-one discussions between an interviewer and interviewee to investigate their personal circumstances and opinions

interview - advantages

beliefs, attitudes, and feelings can be examined in detail

interview - disadvantages

• qualitative info might be difficult to analyze

• time consuming

• huge scope for interviewer bias

focus groups

involves forming small discussion groups to gain insight into the opinions, attitudes, and behavior of respondents

focus groups - advantages

Detailed questions can be asked and participants are more lightly to engage in discussions

focus groups - disadvantages

• tend to be dominated by opinions of extroverts

• tendency for participants to conform to the majority view

• costly as each participant has to be paid

consumer panels

a variation of focus groups; small groups of customers within a business’s target market who are used for regular market research

observations

involves watching how people behave and respond in different situations

observations - advantages

Records actual behaviour rather than what people they would do

observations - disadvantages

Does not necessarily reveal why a person behaves or responds in the way they do

primary research - advantages

• Relevant data is collected as it is tailored for the firm’s needs.

• Up-to-date data is gathered for the most meaningful information.

• Confidential and unique to the purpose of the business.

primary research - disadvantages

• Time-consuming to process.

• Costly, especially if outsourced to professional market research firms.

• Validity can be questionable if the research questions are poorly designed.

secondary/desk research

involves the collection of second-hand data and info that already exists

internal secondary/desk research

those that have already been gathered by the organization itself (company annual reports, sales records)

external secondary/desk research

outside the business (market analyses, academic journals, government publications)

market analysis

reveals the characteristics and trends for a particular product or industry (market research firms, competitors, trade publications)

market analysis - advantages

they enable businesses to access up-to-date and detailed market data and trends

market analysis - disadvantages

very expensive and data can become outdated quickly (unles the source provides regular, ongoing updates)

academic journals

periodical publications from education and research institutions. they publish educational, peer-reviewed articles and findings written by industry experts and academics.

academic journals - advantages

• articles contain the most up-to-date research in an academic discipline

• source is reliable (rigorously authored by academic scholars)

academic journals - disadvantages

• not always relevant to the researcher

• can become outdated quickly

• findings are often contestable

• universities and academic establishments usually charge for access to journals

government publications

broad range of data such as population census, social trends, labor market developments, trade statistics, unemployment figures, inflation rates

government publications - advantages

• Data and stats are usually comprehensive, reliable, and up-to-date

• Govt publications cover a wide range of topics, providing a wealth of data, stats, and info

• Usually free of charge

government publications - disadvantages

• The challenge in finding the info required as the government released a vast amount of information

• Sometimes a fee for researchers to obtain specialist and detailed info from govt publications

media articles

newspapers, magazines, business-related journals, television documentaries, books, websites, blogs, social media

media articles - advantages

• Released frequently (info is up-to-date)

• Technology has made it so that many media articles are free (the companies earn revenue through digital ads)

media articles - disadvantages

• Potential bias from reporters

• Can become outdated quickly

• Some require subscriptions to access certain info

the internet - advantages

• Readily available (24/7)

• Access to countless resources

• Social media allows new to spread easily

secondary research - advantages

• Data is readily available and faster to collect.

• Provides meaningful insight into industry trends.

• Huge range of sources of information available.

• Findings can be based on large sample sizes so results are statistically valid.

secondary research - disadvantages

• Data might be obsolete and irrelevant.

• Information gathered is not tailored to the specific purpose of the firm, thus needs to be further adapted to suit the needs of the business.

• Information is widely available to competitors.

qualitative research

involves getting non-numerical answers and opinions from respondents

quantitative research

involves getting factual and measurable information rather than people’s opinions

quantitative research - two types

• closed questions - list of options

• ranking or sliding scales - the extend to which they agree with a statement

qualitative research - advantages

• better than quantitative research for exploring behaviors and attitudes

• there is more flexibility in the process so useful extra information from interview can be gathered

• it is cost effective in being able gather a lot of information from a smaller number of respondents

qualitative research - disadvantages

• small sample sizes typically used prevent findings from being truly representative of the whole population.

• very time-consuming to conduct and interpret.

• interviewer must be highly experienced in facilitating useful information from respondents.

sampling a market

the practice of selecting a small group of the population fro a particular market for primary research purposes

quota sampling

a certain number of people from different market segments is selected

quota sampling - advantages

• a relatively representative sample can be collected quickly

• findings are more reliable than random sampling

quota sampling - disadvantages

the sample is not always representative of the population due to the number of people interviewed for each segment and how they were selected

random sampling

involves giving everyone in the population an equal chance of being selected for the sample

random sampling - advantage

• easy to select a sample

• minimizes bias or unrepresentative samples

random sampling - disadvantage

it is indiscriminate (selects ppl who aren’t part of the target group due to randomness of selection)

stratified sampling

involves segmentation of market but chooses number of respondents from a segment that is proportional to the population in the market and then randomly selects them as a sample

stratified sampling - advantages

it is more representative of the market

stratified sampling - disadvantages

it can be difficult to select relevant segments and costly to generate accurate info abt the population

cluster sampling

used when getting feedback from respondents involves too much time, travelling, or money

cluster sampling - advantages

quicker, easier, and cheaper than other methods of sampling if population is dispersed over a large geographical area

cluster sampling - disadvantages

bias and sampling errors may occur if too few clusters are selected

snowball sampling

refers to market research carried out with individuals who then suggest other friends, family members, or colleagues to increase the sample size

snowball sampling - advantages

cheap and quick to get hold of relevant contacts for enlarging the sample, especially if the population is unclear

snowball sampling - disadvantages

difficult to determine unbiased findings from the sample due to the nature of such respondent-driven sampling

convenience sampling

uses subjects that are easy to reach

convenience sampling - advantages

availability and quickness of data collection

convenience sampling - disadvantages

inadvertent exclusion of a large proportion of the population, thus presenting high skewed findings

non-sampling errors

recording errors, processing errors, analyzing errors, respondents not giving truthful and honest answers

sampling errors

sample size is too small, sample is not representative of the population, poor sample design, inappropriate method of sampling used, bias in research

presenting data using graphical methods

bar charts, pie charts, line graphs, histograms, scatter graphs, tables

bar charts

showing frequencies and for ease of comparison

pie charts

expressing percentage figures, such as data on market share

line graphs

show time-series data, such as sales figure during the past 12 months

histograms

showing trends over time

scatter diagrams

show possible correlations, such as household income and expenditure

tables

present numerical data in various formats

results from market research - GIGO (garbage in, garbage out)

• findings are only as good as the research methodology used

• data and information can be accurate or unreliable due to bias

• cost of market research is high