104 - Market research

Question 1

what is market research?

Answer 1

market research is the process of collecting information and data about a businesses customers, the marketplace and the activities of competitors within that marketplace

Question 2

Explain the value of carrying out market research (what will business attempt to do) (7)

Answer 2

• Discover the needs of customers
• Understand the structure of the market
• Discover whether or not market demand is increasing
• Establish at what stage is the product in its life cycle
• Test consumer responses to new products or services
• Asses the effectiveness of previous promotion campaigns
• Monitor competition and understand the activities of existing, new and potential competitors

Question 3

What is primary research? (also known as field research)

Answer 3

-Gathers first-hand information.
-The data is new and should be directly relevant to the needs of the business.
-Carried out when there’s a need to collect information which is specific to the business and its products/services

Question 4

What is secondary research?(also known as desk research)

Answer 4

-Involves the use of previously collected information
-Not been gathered specifically for the business but is instead adapted for its use
-Data is more easily available and accessible at a lower cost than primary research

Question 5

Evaluation of market research - include specific drawbacks to primary and secondary

Answer 5

(+)To suggest introduction of new products, modification of existing products
(+) explanatory reasons - e.g. why sales have fallen in the last 6 months
(+)An aid to decision making – helps to make informed decisions - help to decrease the risk of launching unsuccessful products.especially important in fast changing markets
(+)To find out about customer wants and expectations. (e.g how much they are willing to pay)
(-) Market research may predict that an idea/product will succeed but this is not always the case - primary
research depends upon responses of consumers who may not respond in the same manner in the
future.
(-) In secondary research, data does not always meet specific needs of a business
(-)Secondary data can be outdated – especially problematic in fast-changing industries
(-)Research data, especially primary can be time consuming to gather.

Question 6

four methods of primary research and four methods of secondary research

Answer 6

Primary:
-Questionnaires
-Focus groups
-Consumer panels: these are similar to focus groups, but are more product orientated, and are made
up of consumers of products.
-Test marketing
Secondary:
-official publications
-Industry magazines
-internal information
-online desk research

Question 7

advantages and disadvantages of primary research

Answer 7

(+)Research carried out is only available to the business - enable it to gain market advantages of rival firms
(+)up to date info - better enabling decision making
(+)targeted for specific needs that have been identified
(-)can be very expensive - could have been better utilised using secondary
(H) not always more expensive
(-)can be very time consuming - when its collected the market may have changed
(-) Can be bias

Question 8

Advantages and disadvantages of secondary research

Answer 8

(+)can be* inexpensive and quick to obtain
(+)Enables cost effective analysis of several data sources
(-)often out of date
(-)might not be available
(-)little control over quality
(-)Problems of interpretation

Question 9

Define sampling

Answer 9

A sample is a group of respondents to a market research exercise who are selected to be representative of the views of the target market as a whole

Question 10

Define quota sampling

Answer 10

the population is segmented into a number of groups that share specific characteristics.
-The sample is segmented into specific groups with the same characteristics, then a number selected from each group
-This is a relatively cheap method of sampling
compared to many others.
* Results using quota sampling cannot be
regarded as statistically representative of the
population – they are not randomly chosen. There could be higher levels of bias

Question 11

Define random sampling

Answer 11

every member of the population has an equal chance of being selected. It assumes all members are the same (homogenous) and is not always representative
-Attempting to achieve randomness in this way creates expensive fieldwork costs so many businesses tend to adopt quota sampling instead
* Random samples are drawn from local electoral registers and interviewees are contacted at home.
* The interviewer must call three times before giving up on the address – this is to overcome the fact that busy people are those least likely to be at home at certain times.

Question 12

Define bias

Answer 12

something that may cause data within a sample to be weighted towards one
side. Such statistical bias occurs when one subgroup outweighs the other in a sample.
-To avoid bias and collect data that is statistically valid, sampling methods, such as random sampling and quota sampling, must be used to determine the market research sample.
-With questionnaires (as with all forms of research) it is important to gather data from a sample that reflects the whole population.
as a result:
- Data collected may not be representative or reliable
-May be misleading and negatively affect the success of the business

Question 13

Evaluate the usefulness of sampling for a business and its stakeholders

Answer 13

• the sample needs to be large enough to make the data statistically valid. When deciding on an appropriate market size:
  (-)If the sample is very large the research will be very time consuming and expensive
  (-)If its too small then there’s a greater chance that other factors will make the results inaccurate
  (-)Large businesses with large marketing budgets have a significant advantage over smaller businesses