15. Market research Flashcards
Define market research
The process of collecting, recording and analysing data about the customers, competitors and the market
Why is market research important?
- Reduce the risks associated with new product launches
- To predict future demand changes
- To explain patterns in sales of existing products and market trends
- To assess the most favoured designs, flavours, styles, promotions and packages for a product
- Gather info regarding market size, consumers’ tastes, weaknesses and strengths of the product, competitors and their USP
Define primary research
The collection of first-hand data that is directly related to a firm’s needs
Define secondary research
Collection of data from second-hand sources
Types of primary research
- Questionnaires
- Interviews
- Consumer panels (focus groups)
- Observations
Benefits of questonnaires
- Easy to analyse because it is concrete data
- Can be quickly and easily quantified
- Large amounts of info can be collected from large number of people in a short period of time
Drawbacks of questionnaires
- Biased question
- Respondent might not be truthful
- People may interpret the question differently
Benefits of interviews
- Face to face interaction
- Easy correction of speech - any misunderstanding and mistake can be easily rectified
- Capture emotions and behaviours through body language
Drawbacks of interviews
- Time consuming
- Costly
- Qualitative data => hard to analyse
- Might not be recorded
Benefits of consumer panels
- Useful to obtain detailed info about personal feelings, perceptions and opinions
- Saves time and money compared to individual interviews
- Opportunity to seek clarification
- Provide useful material e.g. quote for PR publication
Drawbacks of consumer panels
- Disagreements and irrelevant discussion
- Hard to control/manage
- Difficult to analyse
- As they are self selecting, they may not be an ideal representative
Benefits of observations
- Direct method of collecting data - best for the study of human behaviour
- An additional method to improve precision of research results
- Easy to carry out
Drawbacks of observations
- Problems of the past can not be studied
- Can be subjective
- Cannot study opinions
- Complete answer to any issue can not be obtained by this method alone
Define qualitative research
Research into the in-depth motivations behind consumer buying behaviour or opinions
Define quantitative research
Research that leads to numerical results that can be statistically analysed
Define focus groups (consumer panels)
A group of people who are asked about their attitude towards a product, service, advertisement or new style of packaging
Types of secondary research
- Government publications (census, social and economic trends, family expenditure surveys)
- Trade organisations
- Internal company records
- Internet
- Newspapers reports
Advantages of secondary research
- Often obtainable very cheaply - apart from the purchase of market intelligence reports
- Identifies the nature of the market and assists with the planning of primary research
- Allows comparison of data from different sources
- Gathers info about competitors
Disadvantages of secondary research
- May not be updated frequently
- Data collection methods and accuracy may be unknown
- Might not be available for completely new products development
Define sample
The group of people taking part in a market research survey selected to be representative of the overall market
Define random sampling
Every member of the target population has an equal chance of being selected
Define systematic sampling
Every nth item in the target population is selected
Define stratified sampling
Particular set of people from the population chosen for a sample e.g. age, gender
Define quota sampling
When the population has been stratified and selects an appropriate number of respondents from each stratum. e.g. population: 65% male and 35% female => select 35% from 14-20; 35% from 21-30
Define cluster sampling
Random sample within a particular geographical area
Define convenience sampling
Members of the population are chosen based on their relative ease of acess.
Sample collected from an immediate area close to the researcher
Define snowball sampling
- The first respondent refers a friend and the process continues
- Often used by companies in the financial services sectors. e.g. health, insurance
Define judgmental sampling
The researcher chooses the sample based on who they think would be appropriate to study
- Used by an experienced researcher who may be asked to produce a report in a short period of time
How have the market research developed?
Due to the fast pace of technological change, businesses are turning to electronic means to gather data for marketing strategies.
E.g. membership/loyalty cards containing the info about consumers’ age and gender and able to trace their buying patterns
Cost effectiveness of market research
- As technology develops, costs of market research is reduced
- Well focused and designed market research plays an important role in producing higher sales and profts
