Chapter 2- Market Research Flashcards
Market orientation
A business that is market orientated is one which continually identifies, reviews and analyses consumer’s needs. It is led by the market.
This has several advantages including that it can respond to changes more quickly in the market because of its use of market information and will be in a stronger position to meet the challenge of a new competition entering the market
It is not always a success and businesses may not always succeed in entering new markets
Market Research
The collection, presentation and analysis of information relating to the marketing and consumption of goods and services
Businesses must spend money on market research because it helps reduce the risk of failure, products that are well researched are more likely to be successful – market research data can be used for the following specific purposes.
Identify and anticipate customer wants and needs: in terms of a car such as body style, colour, interior design, performance, economy etc.
Quantify the likely demand for a product: It is important to find out how much of a product a business might expect to sell in a market
Provide an insight into consumer behaviour -some market research is aimed at analysing customer behaviour – they can understand consumer demands
Consumer Panels
groups of customers are asked for feedback about products over a period of time
Database
An organised collection of data stored electronically with instant access, searching and sorting facilities
Focus Groups
Where a number of customers are invited to attend a discussion about a product led by market researchers
Primary Research-
- the gathering of new information which does not already exist
• Questionnaires: have a balance of open and closed questions
(closed allow limited range of responses)
• Postal Surveys: sent out to people but rarely returned so waste of
recourses
• Telephone interviews: cheaper and wide geographical area
covered
• Personal interviews: questions can be explained if customer is
confused – more detail -
• Focus groups: number of customers invited to attend a discussion
led by market researchers – cost-effective but group may be small
and unrepresentative
• Observation – this is where market researchers ‘watch’ the
behaviour of customers. This approach might be used in retail
outlets.
• Test marketing – involves selling a new product in a restricted
geographical area to test it before national launch – reduced risk
of failiure
Secondary Research
- the collection of data that already exists
• Internal data – collected from existing business documents -e.g.
sales figures, annual reports, sales force reports, company
intranets, stock movements
• External data (sources outside business)- information from
competitors , government publications that businesses can use
which include general statistical publications – EU secondary data
such as Euro statistics, international publications such as World
Bank and IMF, Retail audits which provide manageable data by
monitoring and recording sales in a sample of retail outlets.
Qualitative research
- Involves data about attitudes, beliefs and intentions
Based on opinions, attitudes, beliefs and intentions
Answers research questions such as “Why”? “Would? or “How?”
Aims to understand why customers behave in a certain way or how they may respond to a new product or service
Focus groups and interviews are common methods used to collect qualitative data
Quantitive research
- Collection of data which can be measured such as sales figures and
market share
Concerned with and based on data
Addresses research questions such as “how many?” “how often”, “who?”, “when?” and “where?”
Based on larger samples and is, therefore, more statistically valid
Main methods of obtaining quantitative data are the various forms of survey – i.e. telephone, postal, face-to-face and online
Limitations of market research
in reality it is very difficult to predict market trends.
New coke product from research was suggested to be an absolute success yet after in reality it was quickly withdrawn from shops –
issues over sampling and bias which means it is very difficult to cover surveys across a widespread base of the population.
Databases
electronic filing system which allows a great deal of data to be stored – every business which uses computers will compile and use databases.
In the world of business and commerce there is actually a market for information held on databases.
A Market Orientated Marketing Approach:
Where managers take into account the needs of the consumer before making any decision. Putting the consumer at the heart of the decision-making process.
A Product Orientated Marketing Approach:
Where managers focus on what the firm does best = internal efficiency comes before consumer preferences.
The business develops and produces products in the hope they can encourage customers to buy them.
Market segmentation
division of people according to social class etc.
- Geographic – Different customer groups are likely to have different needs depending on where they live – e.g. people living in hot climates, such as Australia or south Africa have different needs to people in temperate climates – different cuisine depending on region
- Demographic – Age, Gender, income, social class, and ethnicity are all important e.g. luxury watches, types of clothing
- Psychographic – groups according to attitudes, opinions and lifestyles: e.g. clothes may be geared towards those who are interested in retro fashions from earlier decades
- Behavioural – attempts to segment markets according to how consumers relate to a product – There are a number of different methods of behavioural segmentation such as usage rate (BA with its Executive Club to encourage and develop the custom of regular business travel), loyalty: E.g Tesco clubcard)
Advantages and disadvantages of Quantitate research
Advantages of quantitative research
- Data relatively easy to analyse
- Numerical data provides insights into relevant trends
- Can be compared with data from other sources (e.g.
competitors, history)
Drawbacks of quantitative research
- Focuses on data rather than explaining why things
happen - Doesn’t explain the reasons behind numerical trends
- May lack reliability if sample size and method is not
valid
