Market Research Flashcards
Define market research
the process of gathering
primary and secondary data on the buying
habits, lifestyles, usage and attitudes of actual and potential customers.
General benefits of market research
- Can identify opportunities and threats, i.e.
changes. - Can be used to monitor sales after a
promotional campaign. - Can help them find alternative routes to
overcome a problem. - Identify target market.
- Reduce risk of failure.
General drawbacks of market research
- Research does not guarantee success.
- It is costly in time.
- Often all that is needed is good intuition or a hunch.
- Costs money.
- Research can be unreliable.
Businesses regard having an understanding of the market place as a major priority. Because of what 3 factors ?
- the expense of launching new products
- the importance of maintaining market share
- the importance of preserving the profile and brand value of existing products.
They need to understand their markets, in order to design products and marketing campaigns that meet the needs of customers.
Reasons for carrying out extensive market research
- An aid to decision making – helps to make informed decisions especially important in fast changing markets.
- To find out about customer wants and expectations.
- To suggest introduction of new products, modification of existing products.
- To find out how much customers are willing to pay/developing pricing strategies.
- To gain competitive advantage/keep pace with competitors/find out what they are doing.
- Predictive reasons – what is likely to happen in the future.
- Exploratory reasons – investigating new possibilities in a market.
- Descriptive reasons – what is happening in the market? Who is buying which products in our portfolio?
- Explanatory reasons – for example to find out why have sales fallen in the last six months.
- Carrying out market research means that consumers may feel that their views are being considered.
*Reduces risk – without market research a business may spend large sums of money developing and launching unsuccessful products.
Reasons against carrying out extensive market research
- Market research may predict that an idea/product will succeed but this is not always the case - primary research depends upon responses of consumers who may not respond in the same manner in the future.
- Data can be based on an unrepresentative sample – sampling discrepancies caused by statistical bias. A poorly constructed questionnaire can also lead to bias.
- In secondary research, data does not always meet specific needs of a business.
- Primary research can be expensive to gather and businesses may have to pay for secondary research.
- Secondary data can be outdated – especially problematic in fast-changing industries.
- Research data, especially primary can be time consuming to gather.
Define primary research
Collecting primary data and information that does not already exist. It is collected for a specific purpose.
Most primary information is gathered through questionnaires, interviews, surveys, focus groups and consumer panels.
Define secondary research
Identifies, collects and collates information that is already in existence. This can be collected internally or externally.
It may be existing business documents, official publications, yellow pages,
industry magazines and online desk research.
Advantages of primary research
- The research carried out is only available
to that business – this will enable it to gain
market advantages over rival firms. - It is up to date information, thereby enabling better decision making.
- It can be targeted for specific needs that the business may have identified.
Disadvantages of primary research
- Can be very expensive to collect – could
the money have been better utilised using
secondary research. - Can be very time consuming to collect so
that by the time it has been collected and
analysed the market may have changed. - Can have problems of bias.
Advantages of secondary research
- It is inexpensive to collect and quick to
obtain. - Enables cost-effective analysis of several data sources.
Disadvantages of secondary research
- Often out of date.
- Might not be available.
- Little control over quality.
- Problems of interpretation.
Define quantitative data
Involves the collection of data that
can be measured. This means the collection
of statistical data such as sales figures and
market share. Surveys and the use of government publications/existing statistics are common methods of collecting quantitative research data.
* Researcher uses tools, such as questionnaires
and surveys to collect numerical data.
* Researcher knows clearly in advance what
they are looking for.
* Recommended during latter phases of
research projects.
* Is usually regarded to be less open to
interpretation than qualitative data
(objective).
* Data is in the form of numbers and statistics
Define qualitative data
Involves collection of data about
attitudes, beliefs and intentions. Focus groups, participant observation and interviews are common methods used to collect qualitative data.
* Researcher may only know roughly in
advance what they are looking for.
* Recommended during earlier phases of
research projects.
* Can be time consuming to collect and may be difficult to draw general conclusions.
* Information gathered is often open to high
degree of interpretation (subjective) and so
there is often disagreements within business about the significance and importance of qualitative data.
* Data is in the form of words, pictures or
objects.
Other functional departments of a business linked to market research
Human Resource
- Marketing will influence the numbers and skills of employees required.
Production
- Marketing helps to determine what to produce, when to produce it and how much money can be spent
producing it.
Finance
- Marketing generates the money for the firm through sales revenue and helps to forecast future sales revenue.
Purchasing
- Marketing will influence how much in the way of raw materials will be needed.
Transport
-Marketing will influence the number of lorries and drivers required.
Define a sample
a group of respondents to a market
research exercise who are selected to be
representative of the views of the target market as a whole.
Define bias
Something that may cause data within a sample to be weighted towards one
side. Such statistical bias occurs when one
subgroup outweighs the other in a sample.
To avoid bias and collect data that is statistically valid, sampling methods, such as random sampling and quota sampling, must be used to determine the market research sample.
Explain Quota sampling
The population is segmented into a number of groups that share specific characteristics.
* The sample is often segmented on the
basis of age or sex. This is known as the
demographic profile.
* Therefore, if it is known that 20% of your
buyers are men, interviewers would be
instructed to interview one man for every
four women in the sample.
* This is a relatively cheap method of sampling compared to many others.
* Results using quota sampling cannot be
regarded as statistically representative of the population – they are not randomly chosen.
Explain Random sampling
Every member of the population has
an equal chance of being interviewed.
* This is not easy to achieve and must not be confused with haphazard sampling.
* Random samples are drawn from local
electoral registers and interviewees are
contacted at home.
* The interviewer must call three times before giving up on the address – this is to overcome the fact that busy people are those least likely to be at home at certain times.
* Attempting to achieve randomness in this
way creates expensive fieldwork costs
so many businesses tend to adopt quota
sampling instead.
Explain sample size
The size of the sample used is very important as it needs to be large enough to make the data statistically valid.
* If sample size is large, the research will take a long time and may be very expensive.
* If the sample size is too small, then there is a greater chance that random factors will make the results inaccurate. This gives large businesses with big marketing budgets a significant advantage over smaller businesses – a good example of an economy of scale.
Differences between primary and secondary research
Primary research provides businesses with specific, original data tailored to their needs, offering detailed insights and potentially more accurate information than secondary research, though it can be expensive and time-consuming. Secondary research, on the other hand, leverages existing data, is cheaper and faster to collect, but may not be perfectly aligned with a business’s specific needs or could be outdated.
Differences between quantitative and qualitative data
Within both primary and secondary research, businesses can choose between qualitative and quantitative methods. Qualitative research focuses on gathering rich, descriptive data, often through interviews or focus groups. Quantitative research, on the other hand, focuses on collecting numerical data, often through surveys or questionnaires.
How to choose the right research approach
The most appropriate method of research depends on the specific research objectives, available resources, and the nature of the business and industry. For example, if a business needs to understand customer preferences for a new product, primary research like surveys or focus groups might be ideal. However, if a business is looking for market size or growth trends, secondary research using industry reports might be sufficient.
Both primary and secondary research have their strengths and weaknesses. By understanding the characteristics of each approach and carefully selecting the most appropriate methods, businesses can gather valuable insights that inform their decision-making processes and contribute to their success.
Advantages of sampling
Cost-Effectiveness: Sampling is generally more affordable than studying the entire population, reducing time and resource expenditure.
Efficiency: It’s faster to collect data from a sample than from the entire population, making it a practical choice for time-sensitive research.
Data Richness: Sampling can allow researchers to collect more detailed information from each participant, leading to more in-depth insights.
Feasibility: When studying large or geographically dispersed populations, sampling makes research more manageable and achievable.
