Ch 17 Market Research

Question 1

Define market research

Answer 1

The process of collecting, recording and analysing data about the customers, competitors and the market

Question 2

Why is market research important?

Answer 2

• 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

Question 3

Define primary research

Answer 3

The collection of first-hand data that is directly related to a firm’s needs

Question 4

Define secondary research

Answer 4

Collection of data from second-hand sources

Question 5

Types of primary research

Answer 5

• Questionnaires
• Interviews
• Consumer panels (focus groups)
• Observations

Question 6

Benefits of questionnaires

Answer 6

• 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

Question 7

Drawbacks of questionnaires

Answer 7

• Biased question
• Respondent might not be truthful
• People may interpret the question differently

Question 8

Benefits of interviews

Answer 8

• Face to face interaction
• Easy correction of speech - any misunderstanding and mistake can be easily rectified
• Capture emotions and behaviours through body language

Question 9

Drawbacks of interviews

Answer 9

• Time consuming
• Costly
• Qualitative data => hard to analyse
• Might not be recorded

Question 10

Benefits of consumer panels

Answer 10

• 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

Question 11

Drawbacks of consumer panels

Answer 11

• Disagreements and irrelevant discussion
• Hard to control/manage
• Difficult to analyse
• As they are self selecting, they may not be an ideal representative

Question 12

Benefits of observations

Answer 12

• 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

Question 13

Drawbacks of observations

Answer 13

• 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

Question 14

Define qualitative research

Answer 14

Research into the in-depth motivations behind consumer buying behaviour or opinions

Question 15

Define quantitative research

Answer 15

Research that leads to numerical results that can be statistically analysed

Question 16

Define focus groups (consumer panels)

Answer 16

A group of people who are asked about their attitude towards a product, service, advertisement or new style of packaging

Question 17

Types of secondary research

Answer 17

• Government publications (census, social and economic trends, family expenditure surveys)
• Trade organisations
• Internal company records
• Internet
• Newspapers reports

Question 18

Advantages of secondary research

Answer 18

• 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

Question 19

Disadvantages of secondary research

Answer 19

• May not be updated frequently
• Data collection methods and accuracy may be unknown
• Might not be available for completely new products development

Question 20

Define sample

Answer 20

The group of people taking part in a market research survey selected to be representative of the overall market

Question 21

Define random sampling

Answer 21

Every member of the target population has an equal chance of being selected

Question 22

Define systematic sampling

Answer 22

Every nth item in the target population is selected

Question 23

Define stratified sampling

Answer 23

This draws a sample from a specified sub group or segment of the population and uses random sampling to select and appropriate number from each stratum

Question 24

Define quota sampling

Answer 24

Quota Sampling is where the target population has been stratified and the interviewer selects and appropriate number of respondents from each stratum

Question 25

Define cluster sampling

Answer 25

• Random sample within a particular geographical area

- take sample from just one or few groups not the whole population

Question 26

Define convenience sampling

Answer 26

Members of the population are chosen based on their relative ease of acess.
Sample collected from an immediate area close to the researcher

Question 27

Define snowball sampling

Answer 27

• The first respondent refers a friend and the process continues
• Often used by companies in the financial services sectors. e.g. health, insurance

Question 28

Define judgmental sampling

Answer 28

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

Question 29

Cost effectiveness of market research

Answer 29

• 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

Question 30

advantages of primary research

Answer 30

-up to date more useful than secondary data

-relevant collected for specific purpose
addresses questions business wants answers to

-confidential, other business dont have acces to this data competitive advantage

Question 31

disadvantages of primary research

Answer 31

• costly market research agencies cost alot for detailed customer surveys and other market reports
• time consuming secondary data obtained faster and easier
• doubts over accuracy