1.1.2 Market research

Question 1

What is meant by Product orientation?

Answer 1

Approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer

Question 2

What is meant by Market orientation?

Answer 2

Approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs

Question 3

Advantages and disadvantages of product orientation

Answer 3

• Business can focus on their own strengths which could lead to new reveloutionary ideas that consumers would have never dreamed of
• Danger if business fails to adapt it’s products in line with what consumers want

Question 4

Advantages and disadvantages of market orientation

Answer 4

• More likely to lead to marketing success as it places consumer views and behaviour at the heart of decision making within the business so increased demand and profits
• Reduces the scope for innovation in an organization

Question 5

What is Market research?

Answer 5

The objective collection, compilation and analysis of information about a market

Question 6

What will effective Market research help the business to do?

Answer 6

• To reduce risk when launching new products or entering new markets
• Anticipate future needs and wants of consumers
• To understand consumer behaviour
• To identify potential consumer demand
• To identify how much consumers are prepared to pay
• To identify competitors and gauge their potential strengths and weaknesses

Question 7

Market research can be either..

Answer 7

Quantitative or Qualitative

Question 8

What is Quantitative data?

Answer 8

Research conducted on a large enough scale to provide statistically reliable data

Advantages: large sample size, easily compared, shows trends in the market

Disadvantages: ability to lie, bias, leading questions lead to results that aren’t accurate, doesn’t explain WHY

Question 9

What is Qualitative data?

Answer 9

Data based on thoughts and opinions

Advantages: helps create the right product, highlights current issues with what is provided

Disadvantages: harder to analyse, unrepresentative of whole market as the answers given are more opinionated

Question 10

What is Primary market research?

Answer 10

This gathers information that is new and does not necessarily exist in any format

Question 11

Examples of Primary market research

Answer 11

Surveys , interviews , observations and focus groups

Question 12

Advantages of Primary market research

Answer 12

• Information gathering is focused on the needs of the business and will not be available to its rivals
• The business can get in-depth information from respondents, for example, reasons behind certain behaviour
• More up-to-date and can be used to ask specific questions and so will be more relevant

Question 13

Disadvantages of Primary market research

Answer 13

• The sample size may be too small and unrepresentative of all of the customers leading to unreliable results
• Bias may mean that researchers can guide respondents to answer questions in a particular way
• A business may need to hire a specialist market research agency to help and the process can be expensive and time-consuming

Question 14

What is Secondary market research?

Answer 14

Involves the collection, compilation, and analysis of data that already exists

Question 15

Examples of Secondary market research

Answer 15

Internet , trade press and government statistics

Question 16

Advantages of Secondary market research

Answer 16

• Information is already available and so is quicker to collect than primary research thereby saving time
• Information is often free (e.g. government websites and internet sources such as Statista) and is cheaper to collect leading to lower costs compared to primary research
• Suitable for a small business that lacks a large marketing budget and/or expertise

Question 17

Disadvantages of Secondary market research

Answer 17

• Information has been collected for other purposes and so may lack relevance or may not be factually correct e.g. Wikipedia
• Can be expensive to purchase market specific secondary data from specialist companies
• Information may be out-of-date, especially in dynamic markets

Question 18

What ways can ICT be used to support market research?

Answer 18

• Websites
• Social networking
• Databases

Question 19

Benefits of the use of websites

Answer 19

Allow businesses to collect primary data more cheaply e.g. tracking consumer searches and analyzing customer reviews as well as collecting secondary data about rivals e.g. prices and special offers. Pop-ups which are used on websites can also be an effective way of gathering information

Question 20

Benefits of the use of databases

Answer 20

These can be used to store large amounts of customer information e.g. Tesco loyalty cards. Databases are also effective in collating customer e-mail addresses so that targeted customers can be surveyed later via e-mail

Question 21

Benefits of the use of social networking

Answer 21

Focuses on gathering information about consumers via online social channels such as Twitter and Facebook. It is also useful as a method of running quick polls and surveys or tracking opinions about brands

Question 22

What is market segmentation?

Answer 22

Process in which a single market is divided into sub markets or ‘segments’

Question 23

Advantages of Market segmentation

Answer 23

• Recognizes that consumers are not all identical and so do not all share the same tastes and preferences
• Products and marketing activities can be altered to meet different needs of different groups of consumers and targeted more precisely
• Less expensive and wasteful than marketing products at wide market segments
• May increase loyalty if the consumer feels that their needs are being met which can lead to repeat purchases

Question 24

Disadvantages of Market segmentation

Answer 24

• Not everyone within a segment will behave in the same way
• May be difficult to identify a segment and consumers can belong to multiple segments at the same time
• Segmentation requires more detailed market research which can prove costly (but beneficial) to the business
• A segment may be identified but it may be too small and unprofitable to cater for

Question 25

What are the limitations of Market research?

Answer 25

• If the sample size is too small then there is more chance that respondents who do not reflect the overall views of the market are over-represented in the sample
• Sample bias: the way that respondents are selected may over represent certain types of people whose views may skew the overall finding away from the views of the total population being research