3.2 understanding markets and customers

Question 1

what is market research?

Answer 1

involves gathering and analysing data relevant to the marketing process.

Question 2

How can market research be used by managers?

Answer 2

• > Analyse the existing position of the business
• > Decide on possible objectives
• > Identify possible actions that could be taken
• > Decide what would be the best action and how they can be implemented
• > Assess how effective marketing decisions have been

Question 3

marketing research + decision making structure:

Answer 3

ANALYSIS

PLANNING -> IMPLEMENTATION -> CONTROL
considering what deciding how best reviewing the
activities to to undertake the success of
undertake activities marketing activities

Question 4

marketing research process:

Answer 4

define problem/objectives -> develop research plan -> implement plan: collect + analyse data -> interpret data + report findings

Question 5

purpose of market research: what do businesses want to know?

Answer 5

• > Who buys - may not be the consumer
• > What they are buying - may not be obvious, things may be bought as presents
• > When are they buying - seasonal? When do they begin thinking about buying
• > Why are they buying - gift, reward themselves etc
• > Who do they ask for information before buying - travel agent?-> Where are they buying - online, in store?

Question 6

what factors do customers consider when buying a product?

Answer 6

personal
economic
social
technical

Question 7

How can market research make a company more competitive?

Answer 7

Provides managers with the information they need to make good decisions. If they understand their customer base then they will know what products to develop, what benefits to offer and how to communicate with them.

THEREFORE:
Providing better value for money to the customer than competitors.

Question 8

what are the 2 types of research

Answer 8

primary: first hand
secondary: uses already existing data

Question 9

what is qualitative data?

Answer 9

opinion based long answer responses

Question 10

what is quantitative data?

Answer 10

numerical based short answer questions

Question 11

what is sampling?

Answer 11

a group of people taken which represent the whole population.

Not as accurate but finding information about the entire populations thoughts / feelings is impossible.

Question 12

Key features of qualitative data:

Answer 12

More in-depth responses 
Not easily measurable
Can ask ‘why?’
Not statistically reliable 
Can find out more information about customers opinions on products 
Time consuming to analyse

Question 13

Key features of quantitative data:

Answer 13

Provides reliable statistical data
Doesn’t explain why such opinions exist
Quick and easy to analyse 
Not all responses can fit into ‘yes / no’
More measurable

Question 14

what is market mapping? (see graph)

Answer 14

Method of market research which involves understanding how customers perceive a product or brand relative to competitors
Understanding perceptions is important - business can enforce them or challenge them

Question 15

what is meant by correlation?

Answer 15

identifying relationships in data (+ve or -ve)

Question 16

what is meant by extrapolation?

Answer 16

when a business tracks what has happened to sales in the past and to estimate what it may look like in the future

Question 17

what is meant by confidence intervals

Answer 17

if a sample has been used, the business cannot be 100% confident in the data. Confidence intervals identify how reliable data is (%)

Question 18

examples of +ve/-ve/0 correlations:

Answer 18

An increase in price leads to fewer sales - resulting in a negative correlation- line going down

An increase in income increases demand - would show a positive correlation- line going up

Zero correlation - no relationship- scattered points

Question 19

strength of correlation:

Answer 19

STRENGTH OF CORRELATION
-1 0 +1
perfect -ve correlation perfect +ve
correlation correlation

• 0.85 is a strong negative correlation where +0.85 is a strong positive correlation
• 0.15 is a weak negative correlation and +0.15 is a weak positive correlation

Question 20

how are samples and confidence levels related?

Answer 20

Sampling provides an insight into the target population but unless you speak with everyone it will not be 100% accurate.
THEREFORE
we have confidence levels that give an indication of how certain they are with results. A 89% confidence level means that the researchers are 89% certain that the results are reliable and represent the total population.
The degree of confidence will rely on:
-> The size of the sample
-> The construction of the sample
-> The margin of error (confidence interval)

Question 21

what is the LAW of demand?

Answer 21

as price falls, demand increases

Question 22

what is price elastic/inelastic demand?

Answer 22

Elastic demand - Demand is very sensitive to a change in price
Inelastic demand - Demand is not very sensitive to a change in price

Question 23

what is the formula for price elasticity of demand?

Answer 23

% change in quantity demanded
___________________________
% change in price

Question 24

what is the % change formula

Answer 24

New - old
________ x 100
Old

Question 25

Calculating price elasticity of demand:

Business A increases their prices by 10% and quantity demanded falls by 15%.

Answer 25

-15 / 10 = -1.5

Question 26

Calculating price elasticity of demand:
Business A charges £2.50 for their products and sells 400 units. They increased their prices to £2.70 and sell 300 units.

Answer 26

£2.70 - £2.50
\_\_\_\_\_\_\_\_\_\_\_  x 100 = 8% - price change 
	£2.50
300 - 400 
\_\_\_\_\_\_\_\_\_\_ x 100 = -25%
	400

Question 27

what is income elasticity of demand? formula:

Answer 27

the sensitivity of demand following a change in income

% change in quantity demanded
___________________________
% change in income

Question 28

Calculating income elasticity of demand:

Income rises by 10% and demand for good A falls by 4%.

Answer 28

• 4 / 10 = - 0.4

Question 29

types of good: (see diagram)

Answer 29

inferior good: 0 to - infinity
normal good: 0 to infinity
normal necessity good: 0 to 1
normal luxury good: 1 to infinity
perfectly inelastic: 0

Question 30

what is the value of technology in market research?

Answer 30

• > Gather more data quickly
• > Easier to analyse
• > Tracking spending
• > Finding out about customer habits
• > Combining data from multiple sources: big data