1.1.2 Market research/ Segmentation/ Product and Market orientation Flashcards
market research
the gathering and analysis of research to help support the implementation of marketing strategy
product orientation
an approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer
what are the tools of product orientation?
product research
product testing
product focus
market orientation
an approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs
factors of market orientation
-consumers are at the centre of marketing decisions
-products will be developed which respond to consumer needs
what are the tools of market orientation?
market research
market testing
customer focus
why is market orientation linked to marketing success?
markets are more dynamic
customers are becoming more specific and demanding
barriers to market entry are getting lower
advantages of market orientation
-close fit with customer expectations
-greater responsiveness to changes in customer needs
disadvantages of market orientation
-regular changes in the appearance of function of a product may leave customers confused about what the brand really stands for
-may struggle to compete against product orientated businesses that invest heavily in new product features and advanced technologies
advantages of product orientation
-allows the business to focus on product quality and innovation
-they can spend most of their efforts and money on doing this
disadvantages of product orientation
-by ignoring customer priorities, the product may not sell very well
what are the two types of market research
primary and secondary
primary research
data collected first hand for a specific research purpose
advantages of primary research
- information gathered is focused on the needs of the business
-can get in depth information form respondents
-more up to date data, can be used to ask specific questions- increasing relevance
disadvantages of primary research
-sample size may be too small and unrepresentative of all customers- unreliable results
-researcher bias may cause respondents to answer questions in a particular way
-business may have to hire a specialist market research agency to help, this can be expensive and time consuming
how does observation work?
(primary research method)
watching how consumers behave, this provides insights but can not answer all questions.
-works well in retail markets
how do surveys work?
(primary research method)
ask a series of questions to a certain number of people, the result from the sample are used to represent a larger audience
-a wider range of responses can be achieved using online survey tools
how do online surveys work?
(primary research method)
low cost and more popular, they are used by smaller businesses as a way of capturing the views of existing and potential customers
how do face-to-face surveys work?
(primary research method)
personal interviews in person are conducted, can be costly but good to gain detailed insights
how do focus groups work?
(primary research method)
these are groups of potential customers that are brought together to discuss their feelings about the product or market, good to gain insights into customer tastes and preferences
how does test marketing work?
(primary research method)
free samples are provided for a limited period of time to the target market to gauge their response to the product
secondary research
data that already exists and which has been collected for a different purpose
advantages of secondary research
-information is already available and is quicker to collect
-information is often free, lower costs
-more suitable for smaller businesses that lacks a large marketing budget/ research expertise
disadvantages of secondary research
-information has been collected for another purpose- lacks relevance
-can be expensive to purchase market specific secondary research from specialist companies
-information may be out of data (especially in dynamic markets)
what is quantitative data?
numerical data, based on larger samples so is more statistically valid
benefits of quantitative data
-is easy to analyse
-numerical data provides insights into relevant trends
-can be compared with data from other sources
drawbacks of quantitative data
-focuses on data rather than opinions and details
-does not explain reasons behind numerical trends
-may lack reliability if sample size and method is not valid
what is qualitative data?
data based on opinions, attitudes, beliefs and intentions
-it aims to understand why customers behave in a certain way or how they may respond to a new product or service
benefits of qualitative data
-essential for important new product developments and launches
-understands customer needs, wants and expectations- useful insights for businesses
-highlights issues
-effective way of testing elements of the marketing mix
drawbacks of qualitative data
-expensive to collect and analyse- need specialist research skills
-based around opinions, so it is not necessarily representative
sampling
the gathering of data from a sample of respondents, the results of which should be representative of the population as a whole.
benefits of sampling
-a small sample size can still provide useful research insights
-using this before making business decisions can reduce risks and costs
-sampling is flexible and relatively quick
drawbacks of sampling
-a risk posed is the sample being unrepresentative of population, leading to invalid conclusions
-risk of bias in research questions
-less useful in market segments where customer tastes and preferences are changing frequently (dynamic markets)
how can ICT be used to support market research?
company websites
-allow businesses to collect primary data more cheaply e.g. tracking searchers.
databases
-used to store large amounts of customer information, they are effective in collating email addresses for example.
social networking
-gathers information about consumers via social media, for example Twitter and Instagram, useful method to run polls and surveys or tracking opinions about brands.
what is market segmentation
the process in which a single market is divided into sub markets or segments
-each segment represents a slightly different set of consumer characteristics
why is it important for businesses to segment their markets carefully?
-better matching of customer needs
-better opportunities for growth (builds sales)
-more effective promotion (target customers are reached)
-gain a higher market share
what are the 4 segmentation factors
demographic
geographic
behaviouristic
psychographic
briefly describe demographic segmentation and its factors
factors such as age, income, gender and social class
geographic segmentation
divides markets using regions, countries, city/ town size and population density
behaviouristic segmentation
how products/ services make customers feel, builds customer loyalty
psychographic segmentation
specific lifestyles and personalities
advantages of market segmentation
-recognises that consumers are not all identical- different tastes and preferences
-products and marketing can be altered to meet different needs of different group of consumers and targeted more precisely
-less expensive and wasteful
-may increase customer loyalty, if they feel needs are being met, leading to repeat purchases
disadvantages of market segmentation
-not everyone in segment will behave in same way
-may be difficult to identify a segment
-this requires more detailed market research which can be more costly
-a segment may be identified, but too small and unprofitable to cater for
market research
collection of data to obtain an insight and knowledge into the needs and wants of customers, structure and dynamics of a market
