1.2.2 Market Research

Question 1

Definition: Market research

Answer 1

1) Market research is where businesses try to find out what customers want/need, and also look at what competitors are doing/offering.

2) It helps them to make business decisions.

3) Market research data can be collected in a variety of ways including; questionnaire, experiment, observation, focus group and interview.

Question 2

Market research: To identify and understand customers

Answer 2

1) A business should use market research to help them identify what a customer need is and how to meet and exceed that need
2) The market research should help to understand the potential customers

Question 3

Market research: To identify gaps in the market

Answer 3

1) A business will carry out marketing research to spot a gap in the market or a potential business opportunity

2) Markets are dynamic and trends change all the time so the more up-to-date the research is – the quicker the business can be to market with the product

Question 4

Market research: To reduce risk and make informed business decisions

Answer 4

1) Market research helps to reduce the amount a financial risk has
2) It gives the business owner solid information on which to base a decision e.g. where is the most convenient location for customers? What type of milkshake do they prefer? How much would customers pay for a milkshake?

Question 5

Definition: Primary research

Answer 5

1) Primary research is the gathering of new information that is specific to the business

2) This is an expensive method of research but will produce good quality information that the business can use for decision making
It is not always suitable, so there are also secondary research methods

Question 6

What is a primary research?

Answer 6

1) Primary research is original data gathered by the researcher
2) The information does not yet exist, so it could not be found on the Internet, a website, in a magazine or anywhere else
3) This is brand new information which the researcher will find out about the business

Question 7

4 main primary research methods

Answer 7

There are lots and lots of methods of gathering primary market research. There are only 4 that your exam board would like you to be able to discuss:

1) Survey
2) Questionnaire
3) Focus group
4) Observation

Question 8

1 survey

Answer 8

1) Primary research may also include a survey of customers who use the business
2) A business can gather quantitative (numbers) and qualitative data (opinions) in this method
3) It can also be used to measure customer satisfaction, giving the business a clear idea of where to improve

Question 9

2 Questionnaire

Answer 9

• A business will have to consider:
  1) Who should they ask? (Random or quota sampling)
  2) How many people should she ask? (sample size)
  3) Where should they stand to ask questions?
  4) How many questions should they ask?
  5) What questions should they ask?

Question 10

3 Focus group

Answer 10

1) A focus group brings a group of potential customers together to talk about the proposed new product or service idea.
2) + Quite a cheap method which gathers lots of data about how customers “feel” about a product
3) - May be hard to persuade people to take part
4) - Views of small numbers of customers may not be the views of everyone

Question 11

4 Observation

Answer 11

A business may choose to gather data from observation of buyer behaviour:
- Do customers shop alone or in groups?
- Do customers notice carefully placed promotions?
- What route do customers take round a store?

Question 12

Definition: Secondary research

Answer 12

1) In secondary research the information already exists in some format, someone has already collected the data

2) Secondary research is also called desk research

Question 13

3 main secondary research methods

Answer 13

• There are lots and lots of methods of gathering secondary market research. There are only 3 that your exam board would like you to be able to discuss:

1) Internet
2) Market reports
3) Government reports

Question 14

1 Internet

Answer 14

1) There are billions of websites on the Internet
2) It’s a great place for a market research to find information about the competition
3) The researchers may get ideas for new ways to market the products by looking at competitors websites

Question 15

2 Market reports

Answer 15

1) Mintel trends and reports – Mintel has a global team of trend analysts constantly assessing change in culture, economy and society and writing industry reports about it
2) Mintel collects all the data and does all the research so their business does not have to, they can just buy the completed report
3) Reports cost between £1,000 - £4,000

Question 16

3 Government reports

Answer 16

1) Office of national statistics (ONS)contains very useful demographic information and data on a range of markets and industries e.g. construction, manufacturing, production and tourism
2) For example: A business can use the government report information to make decisions about expanding overseas

Question 17

Quantitative (Quantity data)

Answer 17

1) Involves gathering data and measuring responses
2) Data displayed in charts, graphs, or as statistics and percentages
3) Questionnaires written to gather numerical data – e.g. number of respondents who…

Question 18

Qualitative (quality information)

Answer 18

1) Seeks to gather and explore feelings and thoughts about a product from consumers
2) Information gathered by;
- Focus group discussions
- Interview with consumers on what they “think” about the product or service
- Observations of buyer behaviour (e.g. only family groups bought the orange squash in a supermarket)

Question 19

The role of social media in collecting market research data

Answer 19

1) Advantages for using social media in market research:
- Cheaper than organising a focus group
- Real time and more up-to-date than other methods which can take months to gather data
- Access to a much larger audience for responses
- Can track trends by searching for popular hashtags and posts see website here for today’s trending tweets

Question 20

The importance of the reliability of market research data

Answer 20

1) A business may hire a market research company to carry out the survey
2) The business then needs to decide if the data can reliably be applied to a wider audience. For example they may have had 40 responses to a survey but have thousands of customers