Chapter 18 - Market Research Flashcards
Define the term “market research”
The process of collecting, recording and analysing data about customers, competitors and the market.
Explain the purposes of market research (6)
- Identify main features of the market. Overall size, growth, competitors
- Reduces the risks of new product launches Researching potential demand allows a business to assess its likely chances of success. s
- Identify consumer characteristics. Who consumers likely to be, wants and needs.
- Explain patterns in sales of existing products and market trends.
- Predict future demand changes. Demand levels for existing products may change. Avoid over/under producing
- Assess the most popular designs, promotions, styles and packaging for a product.
Explain how NPD is supported by market research (4)
- Identify consumer needs and tastes -> p and s research into consumer needs and competitors
- Product idea and packaging design -> testing product and packaging with consumer groups
- brand positioning and testing of advertising -> pre-testing the product image and advertisements
- product launch and after-launch period -> monitoring sales and consumer response
Define the term “primary research”
The collection of first-hand data that is directly related to the needs of the business.
Define the term “secondary research”
The use of existing data that was originally collected for another purpose.
Explain why a business would undertake secondary research first, before primary research (2)
- it is lower cost, obtainable more quickly than PR
- Used to assess main features of market. If too small/too many competitors, might not be worthwhile proceeding with primary research.
Explain the usefulness/advantages of secondary research data (8)
- Can provide information about population, economy, market conditions business operates in/plans to operate in and major trends.
- Help identify key areas of market info that primary research focuses on
- Evidence used as baseline against which primary research data can be compared.
- Large samples used, increases accuracy and reliability
- Accessed via internet
- If time and finance limited, may be only option
- So much of this data, opens up new business possibilities if analysed carefully.
- Many sources, information from one source can be checked against another for accuracy.
State the main sources of secondary data
- Government (e.g. population censuses, vehicle registrations etc)
- Local government
- Trade organisations
*Market research agencies
*Internal company records
*Company reports and accounts
*Newspapers
Explain the limitations to the usefulness of secondary research data (5)
- Data may be out of date. Inaccurate conclusions
- Unlikely to be collected for specific needs of business. Not directly relevant.
- Not all data available to all potential users. Can be expensive to obtain.
- Might indicate potential for new market, but primary research needed to gather specific information
- bid data is vast, not easy to analyse and make useful.
Explain the usefulness of primary research data (7)
- To find out about completely new markets
- To collect data for specific needs of business
- To gather qualitative data which supports quantitative data
- To focus research on market reaction to specific changes made by the business
- gain information from particular target group of consumers
- when up to date data is essential
- When data needs to be cross-checked for accuracy.
Describe different primary data collection methods (5)
- Questionnaire
- Interview
- Observation
- Test marketing
- Focus groups
Explain the limitations of primary research data (4)
- Selection of sufficiently large and representative sample greatly influences accuracy of data
- Business start-ups may not be able to finance detailed PR.
- Newly formed businesses have no customers yet to gain important data from
- Time consuming to collect and analyse
Define the term sampling
The process of selecting a group of respondents from a larger population. The larger the sample, the more representative of the total population it is likely to be.
Explain 3 reasons why primary data may be unreliable
- Sampling bias
- Questionnaire bias. Questions tend to lead respondents towards one particular answer.
- Other forms of bias. Respondent not answering in truthful way.
Define the term “arithmetic mean”
The value calculated by totalling all the results and deviding by number of results.
Explain the limitations of sampling (3)
- Sample may be too small.
Too small to represent a true cross section of whole target population. Bigger sample means less risk of pure chance distorting the results. Cost and time are major constraints. Cost of research increases with sample size. - Risk of sampling bias
Only accurate way is to ask whole target population, expensive, time consuming. Results from sample may be different from those obtained if whole target population had been questioned. Less representative the sample, greater the statistical bias. - Researchers may not use the most appropriate methods of sampling.
If only convenience sampling is used, research results unlikely accurate.
Define the term “mode’
Value that occurs most frequently in a set of data.
Define the term “median”
The value of the middle item when data has been ordered or ranked. Divides data into two equal parts.
Explain the term “qualitative research”
Aims to understand why cosumers behave in a certain way or how consumers may react to launch of new product. Answers to research based on opinions, attitudes and beliefs.
Explain the term “coding”
Prosses of assigning labels to key words or phrases used by consumers during research process. Might include “good value” and “branding”. These responses are matched against other data such as consumers ages/income levels to establish key relationships.
Explain the different forms in which research data might be presented (4)
- Tables.
- Pie graphs. Proportions of different sets of data in relation to the total are clearly shown. Size of each section is determined by angle at centre of circle.
- Line graphs. Showing changes in variable after time. Trends and fluctuations.
- Bar charts. Bands of equal width, varying heights. Easy comparison.
State the formula for the angle of a section in a pie graph
(Value of one section / total value of all sections) X 360 degrees
