1.1.2 Market research Flashcards
What is meant by Product orientation?
Approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer
What is meant by Market orientation?
Approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs
Advantages and disadvantages of product orientation
- 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
Advantages and disadvantages of market orientation
- 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
What is Market research?
The objective collection, compilation and analysis of information about a market
What will effective Market research help the business to do?
- 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
Market research can be either..
Quantitative or Qualitative
What is Quantitative data?
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
What is Qualitative data?
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
What is Primary market research?
This gathers information that is new and does not necessarily exist in any format
Examples of Primary market research
Surveys , interviews , observations and focus groups
Advantages of Primary market research
- 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
Disadvantages of Primary market research
- 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
What is Secondary market research?
Involves the collection, compilation, and analysis of data that already exists
Examples of Secondary market research
Internet , trade press and government statistics
Advantages of Secondary market research
- 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
Disadvantages of Secondary market research
- 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
What ways can ICT be used to support market research?
- Websites
- Social networking
- Databases
Benefits of the use of websites
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
Benefits of the use of databases
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
Benefits of the use of social networking
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
What is market segmentation?
Process in which a single market is divided into sub markets or ‘segments’
Advantages of Market segmentation
- 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
Disadvantages of Market segmentation
- 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
What are the limitations of Market research?
- 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
