3.2 Market Research

Question 1

What is the advantage of market research?

Answer 1

The more a business knows about potential consumers, competitors and the market the greater the chance of success.

Market research allows a company to explore a target market and get opinions and other feedback from consumers about their interest in the product or service.

Question 2

What happens if a business does not carry out market research?

Answer 2

Crucially market research can guide a business to the products and strategy that is most likely to be successful. Without accurate market research data, businesses will have to base their decisions on instincts or guesswork, a high risk strategy.

Question 3

What is market orientation?

Answer 3

Market orientation is an approach that focuses on identifying the needs and wants of consumers and creating products that satisfy them. Essentially, finding out what customers want and giving it to them.

Question 4

What is the opposite of market orientation?

Answer 4

Product orientation

Question 5

What is a product oriented approach?

Answer 5

The opposite is a product oriented or a “take it or leave it” approach, where a business focuses on making the best product, but does not consider consumer needs.

Question 6

What are the benefits of a market oriented approach?

Answer 6

If a business finds out what consumers want, then builds a product or service to fulfill those needs, it is much more likely to have higher sales. A market-oriented approach, therefore, lowers the risk of failure when launching or updating a product or service.

Question 7

what do businesses use market research information for?

Answer 7

1. identifying customer needs.

The more accurately a business understands customer needs the more likely they are to make a product or service to satisfy those needs and generate higher sales.

2. consider the current and future size of the market

crucial in making decisions over developing a new product or choosing between a number of different options for offering new services.

3. How strong are the competition?

Business can learn from the strengths of competitors when designing their own products, but also improve on competitor’s products offering by improving in areas where competitors are weak.

4. What marketing strategy to use?

Business must figure out the most effective way of connecting with consumers, pricing their products and persuading them to buy, based on current market research.

5. analysing consumers views
6. predict future trends and changes in consumer spending.

Question 8

What is Primary Research?

Answer 8

Primary research is research you do yourself (or hire someone to do for you.) It involves going directly to a source, usually customers and potential customers in your target market, asking questions and gathering information.

Question 9

What are the benefits of primary research?

Answer 9

the information is specifically for the individual business needs.

Primary research is tailor made for the specific business’s needs.

the information is up to date. Markets can quickly change, so research carried out a number of years ago may be inaccurate for a product launch today.

Question 10

What are the limitations of primary research?

Answer 10

very high cost for the business as he business has to design and carry out the market research itself,

it takes time to complete the primary research process from design, to collection of results to analysing the results.

requires skills in market research to ensure the correct information is collected from a representative sample of the target market. If the wrong questions are asked, or if the sample is incorrect it can mean the research is inaccurate and unhelpful in guiding marketing decisions.

A business can hire market research experts to conduct the primary research but this will further add to costs.

Question 11

List some methods of primary research?

Answer 11

Consumer surveys
Interviews
Surveys
questionnaires

Question 12

What are consumer surveys

Answer 12

Consumer surveys ask the target market set questions about the product or trends and can be conducted face to face in an interview, or in written form either online or by post.

Question 13

What are interviews?

Answer 13

Interviews may be conducted by stopping potential customers in the street. It allows the market research participants to ask questions if they don’t understand a question. As there is human contact people are more likely to complete the research compared to a written survey.

Question 14

What are the limitations of interviews?

Answer 14

interviewers must be employed to conduct the research so interviews have a much higher cost than online surveys or written questionnaires.

Question 15

What are surveys?

Answer 15

Surveys can also be completed online and are now highly popular, as online surveys are quick and easy to set up, and can be sent to the target market easily by email or social media.

Question 16

What are the limitations of surveys?

Answer 16

as there are so many surveys and requests for feedback sent to consumers these days, they are also easy for consumers to ignore, so response rate may be low and it is difficult to get accurate data.

Question 17

What is a good way to implement surveys?

Answer 17

An incentive to complete a survey like a money off voucher or entry into a competition can help increase the number of potential consumers willing to complete a survey.

Question 18

What are other ways surveys can be sent to people?

Answer 18

Surveys or questionnaires can also be sent by post. This may allow participation from consumers who can’t access online surveys.

Question 19

What are the limitations of sending surveys by post?

Answer 19

However, this increases cost as the business will have to pay for postage, and it is also more inconvenient for respondents as they have to spend time posting the survey. Therefore, the response rate may be low.

Question 20

What are the benefits of focus groups?

Answer 20

there is a free exchange of ideas about the product, customer needs and preferences. Therefore, a business can find high quality information about what typical customers think about a product.

Question 21

What are the limitations of focus groups?

Answer 21

focus groups are costly and time consuming to organise. As the information is qualitative and comes from opinions and experiences, it is difficult to analyse statistics, patterns or represent the data from focus groups on charts.

Question 22

What is secondary research?

Answer 22

Secondary market research uses information that already exists and has been collected by someone else for another reason. This could be finding information online, from government records, newspapers or business reports.

Question 23

What are the benefits and limitations of secondary research?

Answer 23

Question 24

List some methods of secondary research.

Answer 24

1. Governments publish official statistics about their countries for example the average income, population of different regions, average age and income. This may be useful to businesses launching a product in another country.

2.Market research companies produce reports

3. Businesses will also have internal records of customer sales. This may guide a future marketing campaign.

Question 25

What is sampling?

Answer 25

sampling, taking a small number of potential customers and finding out their preferences. If the target market is 10,000 consumers, a business may survey 1% of their target market or 100 consumers.

Generally speaking, the larger the sample, the more accurate the results. However, the sample must be representative, so the age, gender and income of the target market is reflected by the sample.

Question 26

Is the accuracy of secondary research unlimited?

Answer 26

The accuracy of secondary research is often limited as it can often be out of date, or not specifically related to the business.

Question 27

So is market research actually necessary if it can be expensive, time consuming and is not always accurate?

Answer 27

Certainly businesses need to be careful when making business decisions based on market research. Market research can be a very useful guide, but conducting market research and following the results is no guarantee of future success.

However, it is a much higher risk to ignore customer preferences and base decisions on instinct rather than hard data about market trends and consumer needs.

Generally, the more a business invests in market research the more accurate the results. However, there is also an opportunity cost of investing capital on market research rather than other areas, like product development. Therefore, businesses need to find a balance between accuracy and cost to keep the market research budget low. Cost effective market research methods like online surveys can be less time consuming and lower cost.

Question 28

What are the benefits of using charts?

Answer 28

Charts can bring information to life. It is much easier to see trends represented visually rather than figures on a computer screen.

Question 29

What are the benefits of using pie charts?

Answer 29

Pie charts are useful for showing the breakdown of market share.

Question 30

What are the benefits of using line graphs?

Answer 30

Line graphs are useful for showing market trends and performance against competitors.

Question 31

What are the benefits of using bar charts?

Answer 31

Bar charts are an effective way of comparing results visually, but it’s difficult to see precise results so it is more useful for seeing an overview of performance.

Question 32

What is important to think about market results?

Answer 32

With all market research results, it’s important to think about the accuracy of the results. Was the sample size large enough to get representative results? What further information would be useful to know before making a decision?