Market research Flashcards
What is product orientation?
A business is product orientated when it only looks at the product or the production process when deciding what to make next. eg apple phones
When is product orientation appropriate to use?
When there is little competition in the market
When there is little consumer knowledge
When there is low disposable income of customers- when funds are limited customers will buy what is available
What is market orientation?
When the consumer is the most important factor when providing products for the market- the business has a sensitivity to customer requirements and will focus on the needs of the consumer.
How does effective market research help a business?
- reduces risk
- helps understand customer behaviour
- forecasts sales
- understands how much customers will pay for a product
- identifies potential competitors
- helps business be market orientated and prepare for market changes
What is primary data?
New data that is gathered first hand for the benefit of the business. It will be specific to the needs of the business and can be used to make specific decisions.
Explain the different types of primary research methods.
Survey: a questionnaire that can help you make well-informed decisions and maximise the potential of your business.
Observation: observing buyer behaviour- do they shop alone? Do they notice promotions?
Interview: like a questionnaire but face to face and in real time. Measures reactions to new ideas and good for qualitative data.
Test marketing: Offering a product to a carefully chosen sample to decide whether or not the public will like it. Sometimes different locations are given different versions of the product to decide which is better.
Focus group: A group of target market demographic respondents are chosen to take part in product trial.
What is secondary research?
Gathering data which already exists. Also known as desk research.
Explain the different methods of carrying out secondary research.
Government sources: provides demographic information and data on the industry the business is in. Can be used to make decisions about expanding. Can be biased.
Trade publications: Journals that are geared towards people in a specific industry. Gives information about competitor activity and helps small businesses stay in touch with market trends.
Market reports: Businesses can buy market research ie Mintel has a team of analysts who assess changes. Reports cost 1000-3000 pounds and can be used to create ad campaigns or get first mover advantage.
Internet sources: articles, websites, publications etc. Customers often discuss their likes and dislikes about products online.
What is qualitative research?
Research that seeks to gather and explore feelings and thoughts about a product from customers. Can be gathered by:
Focus group discussions
Interviews
Observations
How is qualitative research helpful to a business?
Can help to identify buyer moods, the decisions behind a purchase and other invaluable data.
What is quantitive research?
Research that involves gathering data and measuring responses. Data is displayed in charts and graphs and can be collected through questionnaires.
How is quantitive research helpful to a business?
Can have a large sample, makes the data valid and useful.
Easy to analyse and compare as it is statistical
What is sampling?
The process of choosing the right people to be part of the research.
What is the sample size?
The number of participants in the research.
The sample size needs to be large enough to give the data statistical validity and make it useful for decision making.
What is bias?
When research findings cannot be trusted because of the way the research has been carried out. This can be through:
Interviewer bias
Biased questions
Respondent bias
How can ICT be used to support market research?
Websites: Pop-ups on websites can be used to ask customers about products they have bought or may buy, gather email addresses to target customers and some have useful quantitative data about the industry
Social networks: can be used to support market research and find quantitative research about customer perceptions
Business databases: Data from loyalty schemes can be used to build customer databases. Can be used to target customers and to collect customer information such as income
What is a market segment?
An identifiable group of individuals or a part of the market where consumers share one or more characteristics or needs.
Explain different types of market segmentation.
Segmentation by:
Location: A business may decide to sell in just one country or target products at rural rather than urban areas.
Lifestyle: Customers can be grouped by the way they lead their lives, their attitudes, values, hobbies and interests. eg cars for families vs sports cars
Income: Salary, type of job, social class. Establishing a group’s disposable income helps products be targeting at the relevant group.
Age: each age group has different wants and needs- businesses need to develop marketing strategies that appeal to each age group.
Gender: aimed at either men or women, colours may be used to appeal to different genders.
What are market segment demographics?
statistical data relating to the population and particular groups in it.
What are the benefits to a business of being market-orientated?
Responds more quickly to changes in the market because it’s using market information
In a stronger position to meet the challenge of new competitors entering the market
Can anticipate market changes more easily- more confident that the launch of a new product will be successful
What are the benefits to a business of being product-orientated?
Products are usually innovative- easier to establish USP
You can put more money into R&D
What are the drawbacks to a business of being market-orientated?
- market research is expensive and time-consuming
- research doesn’t always lead to success, good research can still result in money being wasted.
What are the drawbacks to a business of being product-orientated?
Too much focus on the product= not considering the needs of the market. It might not be what people want= risk.
More susceptible to the market competition- if someone comes up with another similar product you haven’t paid enough attention to the market of how to sell that product over another one
What is a USP?
A unique selling point, a competitive advantage
What are the advantages of primary research?
current
specific to the needs of business
reliable
useful for decision making
What are the drawbacks of primary research?
- time-consuming
- can be expensive
- usually unrepresentative sample
What are the benefits of market segmentation?
helps decision-making- pricing, packaging, place (where you distribute it)
helps target consumers
What are the drawbacks of market mapping?
Might show perception rather than reality
Not enough information- success, demand…
