4.4 Market research

Question 1

Define market research.

Answer 1

Market research refers to the range of marketing activities designed to determine the opinions, beliefs and feelings of existing and potential customers. It consists of primary and secondary market research, used to help identify and anticipate the needs and wants of customers.

Question 2

Define primary research

Answer 2

Primary market research involves the gathering of new data and information, because these do not currently exist. Primary market research involves fieldwork so is often referred to as field research.

Question 3

Define secondary research

Answer 3

Secondary market research involves the collection of data and information that have already been collected by another source, i.e. the data or information already exist. Hence, fieldwork is not required as the researcher can do this from the comfort of their own office (which is why secondary market research is also known as desk research).

Question 4

Identify two primary market research methods

Answer 4

The main methods of primary market research are: surveys, interviews, focus groups, and observations.

Question 5

Identify two secondary market research methods

Answer 5

The main sources of secondary market research are: market analyses, academic journals, government publications, and media articles

Question 6

Explain two reasons why organisations conduct market research

Answer 6

• Gather information regarding customer tastes and preferences, such as product design
• Determine the likelihood of customers buying certain products; this is particularly important for product innovation
• Gauge customers reactions to price changes
• Learn about new market trends
• Help businesses improve their marketing mixes
• Reduce risks by having better (more informed) marketing strategies.

Question 7

Explain two advantages for a business of using a survey as a method of market research

Answer 7

• They can enable researchers to gather a large amount of data relatively quickly.
• With online surveys, it is also relatively cheap to collect and collate data over a short period of time.
• Surveys are less expensive and time consuming than other methods of data collection, such as interviews and observations.
• They can be used to collect data and information for a broad range of research purposes.

Question 8

Define the term survey/ questionnaire

Answer 8

A survey is a data collection tool used to gather primary market research about individuals or their opinions, using a series of standardised questions.

Question 9

Explain two disadvantages for a business of using a survey as a method of market research

Answer 9

• Surveys conducted face-to-face can be expensive and time consuming, especially when trying to obtain a large sample that is representative of a target market.
• They can suffer from selection or interviewer bias and/or poorly worded questions, thus generating unrepresentative results.
• Questions in a survey can be poorly worded, so the results are inaccurate or misleading.
• As surveys can be time-consuming to complete, participants may be reluctant to fill out questionnaires or they might do so in a hurry, without giving considered responses to questions (especially if they are open-ended questions).
• Answer choices (options) used in closed questions on a survey may not represent how the survey participants actually feel.
• Even with well-designed surveys and questions, participants may not be entirely truthful due to strategic reasons.

Question 10

Explain two advantages for a business of using an interview as a method of market research

Answer 10

• Interviews are specifically designed to meet the needs of the individual organization.
• They can help the business to gain large amounts of qualitative data.
• Clarification of questions or responses can take place as the researcher can ask follow-up questions. This helps to resolve potential biases in the answers.

Question 11

Explain two disadvantages for a business of using an interview as a method of market research

Answer 11

• As only a small number of respondents are involved, the findings might not be representative of the opinions of the market.
• Potential interviewer bias might occur, thereby distorting the findings or analysis of the responses.
• Interviews can be very time-consuming and are therefore a costly method of market research. Interviews may take a large amount of time to complete, so interviewees may be offered a financial incentive to take part.

Question 12

Explain two advantages for a business of using a focus group as a method of market research

Answer 12

• They help the business to identify the desires and preferences of different segments of the market. This helps the organization to improve its marketing mix and strategy.
• They enable market researchers to gather the opinions and attitudes of customers, and what appeals to them as consumers of the particular product.

Question 13

Explain two disadvantages for a business of using a focus group as a method of market research

Answer 13

• They can be time consuming and expensive, as the participants of a focus group are usually paid for their time.
• Views and feedback are not always representative of the entire market, especially if there are a few individuals who dominate the discussions.
• Similarly, peer pressure and courtesy may force participants to give more polite or somewhat unreliable answers.

Question 14

Explain two advantages for a business of using an observation as a method of market research

Answer 14

• Observations are not reliant on the willingness of people to participate in market research, unlike with surveys and interviews.
• Results are likely to be accurate, realistic and representative as behaviours are monitored. In any case, observations tend to be more objective than interviews or surveys as bias is largely removed.

Question 15

Explain two advantages for a business of using an observation as a method of market research

Answer 15

• Observations are very time consuming, and interpretation of the findings can be highly labour-intensive.
• Research subjects may act differently if they know they are being monitored.

Question 16

Explain two advantages for a business of primary market research

Answer 16

• It provides up-to-date research data and information, specifically to meet the requirements of the organization.
  It is more relevant to the research needs of individual businesses.
• Data collection and findings are unique and exclusively held by the firm, potentially providing it with a competitive advantage.
• Primary research findings enable the organization to fine-tune its marketing strategies, meaning marketing is more focused and cost-effective.
• New online technologies mean that surveys can be completed much quicker, easier and cheaper. Online tools such as Survey Monkey or Google Forms can also automatically generate results of the surveys.

Question 17

Explain two disadvantages for a business of primary market research

Answer 17

• Primary research is relatively costly compared to secondary research since someone has to collect new data.
  In addition, it is time consuming to collect and analyse the results.
• Hence, primary research can delay decision-making due to the prolonged time involved in the planning, gathering, collating and interpreting of the research findings.
• It can be extremely dull, repetitive and tiresome for market researchers to conduct primary market research.
• No matter how carefully designed the research, the findings can be unrepresentative and misleading due to deficiencies in primary market research, such as researcher bias or respondents not taking the research seriously.

Question 18

Explain two advantages for a business of using market analyses as a method of market research

Answer 18

• Market analyses are generally cheaper, and less time-consuming to gather, than primary market research as an alternative.
• In addition, as a form of secondary research, the information has already been gathered and is available. This helps firms to access up-to-date market data and trends.
• Market analyses provide detailed information about various aspects of a product, market or industry.
• Market research agencies specialise in producing market analyses, providing detailed market intelligence reports. Most organizations are do not have such expertise to gather data to produce such detailed reports. These specialise also usually update their analyses in order to keep them relevant.

Question 19

Explain two disadvantages for a business of using market analyses as a method of market research

Answer 19

• It can be expensive to use market analyses, as they usually have to be paid for. For example, data on Statista is predominantly only available to its subscribers. Hence, market analyses may not be readily available to smaller organizations.
• Market analyses can become dated rather quickly, unless the source provides regular updates.
• The data is not exclusive to any organization, as rivals can also purchase these reports, or subscribe to agencies that provide up-to-date analyses.

Question 20

Explain two advantages for a business of using academic journals as a method of market research

Answer 20

• Articles published in scholarly journals contain the most up-to-date research in an academic discipline.
• The data and information in the academic journal is likely to be reliable as it has been produced by scholars in a systematic way, and with the feedback and assessment of peers.

Question 21

Explain two disadvantages for a business of using academic journals as a method of market research

Answer 21

• The information is not always relevant to businesses, and the contents or findings are often contested.
• Universities and academic establishments tend to only allow paying subscribers to access academic journals.

Question 22

Explain two advantages for a business of using government publications as a method of market research

Answer 22

• Data and statistics from the government are usually comprehensive, reliable and up-to-date.
• There is a large volume of government publications, covering a wide range of topics, so this provides market researchers with a wealth of data and information.
• A lot of government publications are available for free.

Question 23

Explain two disadvantages for a business of using government publications as a method of market research

Answer 23

• Due to the vast amount of information available, identifying and locating government publications can be difficult.
• Not all data and information are readily available or are only obtainable for a fee.

Question 24

Explain two advantages for a business of using media articles as a method of market research

Answer 24

• The online versions of media articles are readily available to users, 24 hours a day, every day. With advances in technology, many more people have access to websites and apps of the larger newspapers companies and news broadcasters.
• News media articles are released extremely frequently. These are often updated regularly too, providing market researchers with easy and frequent access to up-to-date information.
• Many media sources do not require users to take out a subscription in order to access their websites.
• The growing popularity of social media and social media marketing (SMM) mean that news via media articles can be easily spread/shared via social networks (such as Twitter, Facebook and Instagram).

Question 25

Explain two disadvantages for a business of using media articles as a method of market research

Answer 25

• There is potential bias from the journalists and authors.
• Articles can become out of date (and hence irrelevant) quite quickly.
• Many magazines, such as IB Review, require a subscription in order for users to access the resource.

Question 26

Explain two advantages for a business of secondary market research

Answer 26

• Relatively quick to collect as someone else has gathered the information. By contrast, primary market research tends to be more time-consuming.
• Relatively cheap to collect the information, especially from sources that are free. For example, researchers can gather information from corporate websites and online media sources.
• With digital technologies, it has become easier for researchers to access data and information online.

Question 27

Explain two disadvantages for a business of secondary market research

Answer 27

• The data and information is not uniquely available to the researcher, so rivals also have access.
• Secondary market research needs to be adapted to the researcher’s specific needs.
• Secondary market research data can become outdated very quickly.
• Secondary research is research that is already collected by someone else so has to be filtered to meet a firm’s individual needs.

Question 28

Define the term qualitative research

Answer 28

Qualitative research is a category of market research based on the opinions, perceptions, views, and preferences of research participants. It creates detailed and non-numerical information. The results of are typically descriptive in nature and aim to reveal the preferences of the research subjects (participants).

Question 29

Define the term quantitative research

Answer 29

Quantitative research is a category of market research based on gathering numerical data and figures, i.e. quantifiable data. It enables researchers to determine trends, correlations and patterns, such the number of people prefer a particular brand. It focuses on collecting large amounts of data.

Question 30

Identify two sampling methods which can be used for market research purposes

Answer 30

Quota
Random
Convenience

Question 31

Define the term quota sampling

Answer 31

Quota sampling refers to the sampling technique where researchers select a number of candidates from different market segments and then group them together according to various characteristics

Question 32

Explain two advantages of quota sampling

Answer 32

• Unlike random sampling, quota sampling enables researchers to gather representative data from sub-groups.
  It is suitable when researchers want to detect possible relationships between sub-groups.
• It enables researchers to investigate particular traits (characteristics) of a certain sub-group in order to improve its marketing strategies.
• The researcher has control of who is included in the sample.
• The findings are usually more reliable than those collected from random sampling, especially where the proportions of the different sub-groups of the population are known in advance.

Question 33

Explain two disadvantages of quota sampling

Answer 33

• Researchers need time to determine the characteristics on which they will base the quota sample in order to generate representative results.
• Selection is not random, so can be subject to researcher bias and sampling errors. This means that results might not be statistically representative.

Question 34

Define the term random sampling

Answer 34

As the name suggests, researchers using random sampling select anyone in the population for market research. It is based on an arbitrary method, allowing all respondents the same equal chance of being selected.

Question 35

Explain two advantages of random sampling

Answer 35

• Results are, in theory, random as everyone in the population has an equal chance of being selected for research.
  Results are therefore (in theory) free from researcher bias and sampling errors, so are more likely to be accurate and representative.
• It is a quick and simple method of sampling, particularly if research participants are freely available.

Question 36

Explain two disadvantages of random sampling

Answer 36

• Random sampling only tends to work well if members of a population are likely to have similar views or characteristics.
  The sample, being just random, could be very skewed, so is not necessarily representative of the population.
• The sample needs to be large enough to generate results consistent with the opinions and views of the target population, but this can be time consuming and costly to implement.

Question 37

Define the term convenience sampling

Answer 37

Convenience sampling refers to the practice of using people that are within easy reach, in an unplanned way, to conduct market research. The sample is simply made up of whoever is willing to participate in the research.

Question 38

Explain two advantages of convenience sampling

Answer 38

• Samples are created by using research subjects who are easily and readily accessible.
• It is the quickest, easiest, and cheapest method of sampling.

Question 39

Explain two disadvantages of convenience sampling

Answer 39

• As the least representative method of sampling, the results may be biased and atypical. Hence, the research findings may be of limited use.
• Therefore, it is unlikely the convenience sample will accurately represent the views of the wider target population.

Question 40

Define the term focus group

Answer 40

Focus groups involve forming small discussion groups to gain insight into the attitudes and behaviour of respondents. The group is typically made up of participants who share a similar customer profile.

Question 41

Define the term government publication

Answer 41

Government publications are a type of secondary market research, referring to official documents and publications released by government entities and agencies.

Question 42

Define the term sampling

Answer 42

Sampling is a primary research technique that selects a sample of the population from a particular market for research purposes.