1.1.2 Market Research

Question 1

Market Research

Answer 1

The collection and analysis of data and information to inform a business about its market.

Question 2

Primary market research

Answer 2

Involves the collection of first hand data that did not exist before and therefore its original data.

Question 3

Examples of primary market research

Answer 3

Focus groups
Surveys
Questionnaires
Observations
Interviews

Question 4

Benefits and drawbacks of primary market research

Answer 4

+ Up to date.
+ Tailored to precise business needs.
+ Rivals can’t access data.
+ In-depth information.

• Expensive.
• Time consuming.
• Small sample size.
• Some methods require certain skills.

Question 5

Secondary market research

Answer 5

Research that has already been undertaken by another organisation and so already exists.

Question 6

Examples of secondary market research

Answer 6

Internet
Newspapers/magazines
National and local government e.g. office for national statistics
Market research organisations
Professional bodies
International bodies
Academic organisations.

Question 7

Benefits and drawbacks of secondary market research

Answer 7

+ Free or very cheap.
+ Available immediately.
+ Adaptable and flexible.

• May be outdated.
• Not tailored to precise business needs.
• Rivals can access this data.

Question 8

Focus groups

Answer 8

A form of qualitative research in which a group of people are asked about their perceptions, opinions, beliefs and attitudes towards a product, service, concept, advertisement, idea of packaging.

Question 9

Benefits and drawbacks of Focus Groups

Answer 9

+ Easily measure customers reaction.
+ Face-to-face interactions provide richer insights.
+ More unique and personalisable.

• Can be costly and time consuming.
• Small groups.
• May not give honest opinion.

Question 10

Quantitative research

Answer 10

Numerical data, measures things and produces statistical information.

Question 11

Benefits and drawbacks of quantitative research

Answer 11

+ Easy to analyse.
+ Provides insights into relevant trends.
+ Can be compared with data from other sources.

• Doesn’t explain reasons behind numerical trends.
• May lack reliability if sample size is small.

Question 12

Qualitative research

Answer 12

Based upon feelings, attitudes and opinions.

Question 13

Benefits and drawbacks of qualitative research

Answer 13

+ Essential for new product development and launches.
+ Focused on understanding customer wants and expectations.
+ Can highlight issues that need addressing.
+ Effective way of testing elements of the marketing mix.

• Expensive to collect and analyse.
• Based around opinions – always risk that sample is not representative.

Question 14

Use of ICT to support market research

Answer 14

• Collecting data through websites
• Social media
• Databases – data mining and trends.

Question 15

Market Orientation

Answer 15

An outward looking approach to new product development where the key focus is on what product the customer wants.

Question 16

Product Orientation

Answer 16

An inward looking approach to new product development where the key focus is on what products can be made and the production process.

Question 17

Market segmentation

Answer 17

When the market is split into subgroups of consumers with similar characteristics.

Question 18

Types of segmentation

Answer 18

1. Demographic = Subgroups of the population based on their demographic profile or characteristics. Age, gender, level of education, race, religion, family size and stage in life.
2. Geographic = Based on where people live.
3. Income segmentation = Based on levels of income and profession.
4. Behavioural segmentation = Based on behavioural patterns of consumer. Frequency of purchase, method of purchase, time of purchase, reasons for making purchase.

Question 19

Benefits of market segmentation

Answer 19

• Advertising can be targeted at specific segments so that advertising spend is more effective.
• Most profitable and least profitable customers can be identified.
• Helps a firm improve existing products and customer service.