1.2.2 Market Research Flashcards
1
Q
The purpose of market research:
A
- to gather information and data which will enable the business to be informed in its decisions and so reduce the risk of failure
- to identify and understand customer needs
- to identify gaps in the market or opportunities
- understands trends in market e.g. market growth
- identify and understand competitors
- understand how well the business is doing e.g. the customers’ opinions of its products
2
Q
What does effective market research provide insights into?
A
- market (e.g. size, structure, trends)
- competition (e.g. who, market share, USP)
- customers (e.g. who, needs, wants, expectations)
- market segments e.g. existing or new segments offering opportunities
3
Q
Two categories of market research:
A
- primary market research
- secondary market research
4
Q
Primary market research:
A
data collected first-hand for a specific research purpose
5
Q
Primary market research methods:
A
- surveys and questionnaires
- focus groups
- observation
6
Q
Advantages of surveys and questionnaires as a primary market research method:
A
- Can be done by post, telephone, face to face or online - given to existing and potential customers
- Relatively cheap and can produce good quality data, if the sample size is large enough
- Data collected is usually quantitative and therefore easy to analyse
7
Q
Disadvantages of surveys and questionnaires as a primary market research method:
A
- Questions need to be well designed to ensure the information collected is reliable
- Reply rates are often low, especially for telephone and postal methods
- Can be expensive and time consuming for a large sample to be obtained that truly represents the views of the general population
8
Q
Advantages of focus groups as a primary market research method:
A
- Good way of getting detailed information about customer tastes and preferences
- They provide detailed information and opinions i.e. qualitative information
9
Q
Disadvantages of focus groups as a primary market research method:
A
- Can be costly and time consuming to conduct and therefore need to be careful managed
- Only a small amount of data is collected which may not reflect the viewpoints of others fully
10
Q
Advantages of observation as a primary market research method:
A
- Works well in retail, for example by observing the footfall outside a shop, reviewing window displays, stock layout etc.
- Can observe consumer behaviours
11
Q
Disadvantages of observation as a primary market research method:
A
- Expensive and time consuming, though larger businesses will use data from tills which can provide detailed sales records
- Observations may need to be carried out at different times to ensure the results are accurate
12
Q
Benefits of primary market research:
A
- directly focused to research objectives
- kept private - not publicly available
- more accurate
- up to date
- specific to needs
- effective at collecting qualitative data
- direct customer contact
13
Q
Drawbacks of primary market research:
A
- time-consuming and costly to obtain
- risk of survey bias
- sampling may not be representative of whole population
14
Q
Secondary market research:
A
data that already exists that has been collected for a different purpose
15
Q
Secondary market research methods:
A
- government information/data
- competitor websites
- customer reviews
- trade association, trade press and magazines
- newspaper (printed press)
- market research reports
16
Q
Government information/data:
A
- Provides detailed insights on the economy and on many industry sectors
- There is also population data published by the government based on the census
17
Q
Competitor websites:
A
Valuable information on marketing activities of competitors including their products, prices and promotional activities and materials
18
Q
Customer reviews:
A
- The internet provides data from product users who give ratings and feedback about a particular product
- In some cases these are independent sites e.g. Trip Advisor, in other cases they are provided by the business itself e.g. Amazon
19
Q
Trade associations, trade press and magazines:
A
Most industries have an industry association - they are a good source of market analysis, which is particularly useful for new businesses which may have little or no experience of the market
20
Q
Newspapers (printed press):
A
- Financial and economic information is provided on a daily basis
- Newspapers provide local, national and international data which is up to date
- They also provide case studies of other local businesses
21
Q
Market research reports:
A
Organisations such as Mintel and Keynote produce a wide variety of expensive reports that analyse individual markets
22
Q
Benefits of secondary market research:
A
- often free and easy to obtain
- good source of market insights
- quick to access and use
- more general
- less time-consuming
- effective at collecting quantitative data
23
Q
Drawbacks of secondary market research:
A
- can quickly become out of date
- not tailored to business needs
- specialist reports are often quite expensive
24
Q
Quantitative data:
A
- Data that is normally numerical
- Main methods of obtaining quantitative data are the various forms of survey – i.e. telephone, postal, face-to-face and online
25
Benefits of quantitative data:
- Data relatively easy to analyse
- Numerical data provides insights into relevant trends
- Can be compared with data from other sources e.g. competitors, history
26
Drawbacks of quantitative data:
- Focuses on data rather than explaining why things happen
- Does not explain the reasons behind numerical trends
- May lack reliability if sample size and method is not valid
27
Qualitative data:
- Based on opinions, attitudes and beliefs
- Focus groups and interviews are common methods used to collect qualitative data
28
Benefits of qualitative research:
- Essential for important new product and development launches
- Focused on understanding customer needs, wants, expectations that provide very useful insights for a business to base its decision-making
- Can highlight issues that need addressing e.g. why customers do not buy
- Effective way of testing elements of the marketing mix e.g. new branding, promotional campaigns
29
Drawbacks of qualitative research:
- Expensive to collect and analyse; requires specialist research skills
- Based around opinions; there is always a risk that the sample chosen is not representative of others
30
Benefits of social media to collect market research data:
- Quick - Using Facebook and Twitter, reactions to new products will be live in minutes, providing instant feedback
- Easy to set up surveys and polls
- Provides an insight into the market in which the business is competing
- Free tools available that allow businesses to collect social media statistics
- Users are engaged in the comments process and will interact with the business and each other - comments can be followed up, for example using Facebook private messaging, to gain further data and information
31
Drawbacks of using social medical to collect market research data:
- Feedback provided through social media comments may not be representative of actual opinions and may just represent a small number of comments of people who do not like change or new ideas
- Danger of social media becoming too negative and this message spreading very quickly in a viral fashion. Need for staff training involved in this process, which will increase costs and be time-consuming
- For a small business, the monitoring of social media can again become very time-consuming, which can detract from other important roles in the firm
32
What is the importance of the reliability of market research data?
- **Bias:** Market research involves taking samples. Samples may involve some bias either through the time, location or type of people chosen. Smaller samples are more likely to be biased, but large samples are expensive and time-consuming to conduct.
- **Out of date:** Any research will be out of date once it has been collected. But some, especially secondary data, can be very out of date and not a reliable representation of the current situation facing a business. This can result in incorrect decisions being made.
- **Inaccurate:** Either the question or the answers can result in inaccuracies. If the question is not clear, then the answers given will be of little use.
33
Aspects of market research:
- size and scale
- effective market research
- bias
- reliability
34
How does size and scale affect market research?
- can be expensive and small businesses may only be able to do a little
- larger businesses may pay market research company to carry out extensive primary research
- the greater the sample size (proportion of population) used, the more accurate the research will be
35
What is effective market research likely to link?
effective market research likely to link quantitative and qualitative data together
36
Bias:
the inclination to agree with an idea
37
How can market research data be biased?
- market research data can be biased if customers give the answers that they think the business wants them to give
- bias also occurs by not surveying a representative sample of people
38
How does reliability affect market research data?
in order to make good business decisions, research data should be reliable - it should come from a representative sample and the questions should enable people to give them accurate and relevant answers
