1.2.2 Market Research Flashcards
The purpose of market research:
- 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
What does effective market research provide insights into?
- 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
Two categories of market research:
- primary market research
- secondary market research
Primary market research:
data collected first-hand for a specific research purpose
Primary market research methods:
- surveys and questionnaires
- focus groups
- observation
Advantages of surveys and questionnaires as a primary market research method:
- 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
Disadvantages of surveys and questionnaires as a primary market research method:
- 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
Advantages of focus groups as a primary market research method:
- Good way of getting detailed information about customer tastes and preferences
- They provide detailed information and opinions i.e. qualitative information
Disadvantages of focus groups as a primary market research method:
- 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
Advantages of observation as a primary market research method:
- Works well in retail, for example by observing the footfall outside a shop, reviewing window displays, stock layout etc.
- Can observe consumer behaviours
Disadvantages of observation as a primary market research method:
- 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
Benefits of primary market research:
- 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
Drawbacks of primary market research:
- time-consuming and costly to obtain
- risk of survey bias
- sampling may not be representative of whole population
Secondary market research:
data that already exists that has been collected for a different purpose
Secondary market research methods:
- government information/data
- competitor websites
- customer reviews
- trade association, trade press and magazines
- newspaper (printed press)
- market research reports