market research chapter 18

Question 1

market research

Answer 1

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

Question 2

what can market research use to measure customer market research

Answer 2

new products
different price levels
alternative forms of promotion
new types of packaging online distribution.

Question 3

what are the key features a business needs to establish

Answer 3

Overall size - is it worthwhile for the business to be entering this market?
Growth - is the market becoming bigger or smaller in terms of sales?
Competitors - how many other businesses sell in this
market and how much market power do they have?

Question 4

New product Development process (NPD)

Answer 4

identify consumer needs and tastes-primary and secondary research into consumer needs and competitors
product idea and packaging design-testing the 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

Question 5

identifying consumer characteristics

Answer 5

It is important to establish who the consumers of a product are likely to be, their wants and needs. By being aware of the profile of potential consumers, products can be targeted at the appropriate market sector, based on factors such as age range, income level and social class.

Question 6

Explain patterns in sales of existing products and market trends

Answer 6

Market research needs to be conducted for existing products as well as new ones. This data was used in the company’s promotions to try to reverse the sales trend.

Question 7

Predict future demand changes

Answer 7

Demand levels for existing products may change. Unless a business tries to forecast these changes with market research, it may overproduce or underproduce a product.

Question 8

Assess the most popular designs, promotions, styles and packaging for a product

Answer 8

Consumer testing of products, or the promotions used to sell them, is constantly undertaken by some businesses. Different versions of a product or potential new advertisements need to be consumer-tested before a final decision is made on them. Consumer responses can then be incorporated into the final product.

Question 9

primary research

Answer 9

the collection of first-hand data that is directly related to the needs of the business.

Question 10

secondary research

Answer 10

the use of existing data that was originally collected for another purpose.

Question 11

differences between primary research and secondary research

Answer 11

Primary research is the first-hand collection of data by an organisation for its own needs. In contrast, secondary research is the use and analysis of data that already exists. Secondary research data was originally collected by another organisation, often for a different purpose.

Question 12

reasons to choose secondary research

Answer 12

It is lower cost and obtainable more quickly than primary data.
It can be used to assess the main features of a market. If this appears too small or has too many competitors, it might not be worthwhile proceeding with primary research.

Question 13

advantages of secondary research data

Answer 13

It can provide information about the population, the economy, the market conditions that a business operates in or plans to operate in and major trends in that market.
It can help identify the key areas of market information that primary research needs to focus on.
It provides evidence that can be used as a baseline against which primary research data can be compared.
Large samples are often used, which increases accuracy and reliability.
Many of the sources of secondary data can be accessed via the internet.
If time or finance is very limited, secondary research might be the only option.
vast amounts of data that could open up new new business possibilities
many sources of data that allows information to be checked against another for accuracy

Question 14

Government (sources of secondary data)

Answer 14

These are usually available for free on the internet.
They may be several years out of date

Question 15

local government (sources of secondary data)

Answer 15

These are usually available for free on the internet.
They may be several years out of date

Question 16

industry specific publications by trade organisations (sources of secondary data)

Answer 16

These are not always available for free.
Membership of the trade organisation may be needed to obtain detailed data.

Question 17

market research agencies (sources of secondary data)

Answer 17

These are often very expensive.
They are not usually updated annually.

Question 18

internal company records (sources of secondary data)

Answer 18

low cost and immediately available. Secondary data exists within any business.

Question 19

company reports and accounts (sources of secondary data)

Answer 19

These allow analysis of competitor performance.
Detailed, confidential information is not available from this source.

Question 20

limitations to secondary research data

Answer 20

Data may be out of date as not all sources update every year. could lead to inaccurate conclusions based on old data.
Data is unlikely to have been collected for the specific needs of the business. It might not be directly relevant or may not use the population samples that business really wants.
Not all secondary data is available to all potential users. Even if it is available, it can be expensive to obtain.
Secondary data might indicate the potential for a new market, but primary research will be needed to gather specific information for potential consumer profiles and their product preferences.
Big data is so vast that it is not easy to analyse and to make useful for an individual business. Data analysis businesses will do this, but at a high cost.

Question 21

qualitative data

Answer 21

non-numerical data, which provides insight into the detailed motivations of consumers and helps to explain their buying behavior or opinions.

Question 22

quantitative data

Answer 22

numerical results from research that can be statistically analyzed.

Question 23

advantages of primary research data

Answer 23

To find out about completely new markets, for example, for innovative products for which no secondary data exists.
To collect data for the specific purposes of the business. The information gathered will provide direct answers to the questions the business is asking.
To gather qualitative data which supports and helps to explain quantitative data.
To focus research on market reaction to specific changes made by the business,
To gain information from a particular target group of consumers.
When up-to-date data is essential, such as in rapidly changing markets.
When data needs to be cross checked for accuracy - different methods of primary data collection allow for results to be verified and for different types of information to be gathered.

Question 24

questionnaire (primary data collection method)

Answer 24

Questionnaires can include detailed, open questions which give qualitative and quantitative data.

Question 25

interview (primary data collection method)

Answer 25

Interviews allow personal contact with respondents.

Follow-up questions can be asked.

Question 26

observations (primary data collection method)

Answer 26

If people know they are being observed, they could behave differently.

Question 27

test marketing (primary data collection method)

Answer 27

The results might indicate whether the national launch of a new product will achieve sales targets.

Question 28

focus groups (primary data collection method)

Answer 28

Focus groups encourage debate between consumers about a product or advertisement. Discussion is observed and recorded.

Question 29

limitations of primary research data

Answer 29

The selection of a sufficiently large and representative sample greatly influences the accuracy of data.
Business start-ups may not be able to finance detailed primary research.
Newly formed businesses have no customers yet to gain important data from.
It can be time-consuming to collect and analyse primary research data.

Question 30

developments in market research

Answer 30

questionnaires can be sent out, answered and returned by tablets and mobile phones. Businesses can also access the vast quantity of information that electronic data retrieval methods offer them. Specially developed software makes use of social media, chat apps and behavioral data, It combines this data with software that learns to understand a respondent’s thoughts, ideas and emotions. Online marketing allows firms to conduct research projects for just a few thousand dollars, taking advantage of pre prepared questionnaires, with the results coming in within a few days.

Question 31

sampling

Answer 31

the process of selecting a group of respondents from a larger population

Question 32

sample

Answer 32

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

Question 33

what is the need for sampling

Answer 33

it is impossible to seek evidence from the total population. because that market is so extensive that contacting everyone in it would be too expensive or time-consuming, or because it is impossible to identify everyone in that market. Therefore, a sample of the total potential market will need to be chosen. The larger the sample, the more representative of the total population it is likely to be. Greater confidence can then be placed in the final results.

Question 34

sample may be too small (limitations of sampling)

Answer 34

To save on costs, a very small sample might be researched. This is likely to be too small to represent a true cross section of the whole target population. Cost and time are the two major constraints. The cost of research increases greatly with the sample size, especially when a specialist firm of market research analysts is used. Cost-effectiveness is an important consideration in market research,

Question 35

sampling bias

Answer 35

when a sample is not a good representation of the whole population, because it is chosen in ways which give some people a greater chance of being selected.

Question 36

researchers may not use the most appropriate methods of sampling (limitations of sampling)

Answer 36

Researchers need to know the best and most statistically accurate methods of selecting samples. If only convenience sampling is used (i.e. asking those people who are most conveniently and easily contactable), the research results are most unlikely to be accurate.

Question 37

risk of sampling bias (limitations of sampling)

Answer 37

The only really accurate method of primary research is to ask the entire target population, but this is expensive and time-consuming. The only really accurate method of primary research is to ask the entire target population, but this is expensive and time-consuming. the larger the sample size, the greater the chance that a high confidence level will be met.

Question 38

reliability of data collected (issues)

Answer 38

Sampling bias. not answering truthfully. questions may lead to respondents

Question 39

analysis of data (issues)

Answer 39

Interpreting and analyzing quantitative or numerical data can start with an attempt to identify key features of the data. This data is currently in its raw form. It has not been ordered, presented or analysed in any way to aid its interpretation by the user. In this raw form, the data makes little sense and is of no value. The data will then be in a form that will allow for further analysis, which can aid decision-making.

Question 40

averages (measures of data)

Answer 40

An average is a frequently used measure of a set of data. Averages tell us something about the central tendency of data. There are several different types of average that can be calculated from any set of data. The three most frequently used are: arithmetic mean, mode, median

Question 41

arithmetic mean

Answer 41

the value calculated by totaling all the results and dividing by the number of results.

Question 42

mode

Answer 42

value that occurs most frequently in a set of data.

Question 43

median

Answer 43

value of the middle item when data has been ordered or ranked. It divides the data into two equal parts. number of values +1/2

Question 44

uses of mean

Answer 44

Used as an indicator of likely sales levels per period of time. This could be used to help determine re-order levels. Used for making comparisons between sets of data

Question 45

uses of mode

Answer 45

Could be used for inventory ordering purposes

Question 46

uses of median

Answer 46

Could be used in wage negotiations. often used in advertising

Question 47

advantages of mean

Answer 47

Includes all of the data in its calculation. The most well-known average; it is widely used and easily understood.

Question 48

advantages of mode

Answer 48

It is easily observed and no calculation is necessary. The result is a whole number and easily understood.

Question 49

advantages of median

Answer 49

It is less influenced by extreme results than the mean. So, it is more appropriate than the mean when there are a few very high or very low results.

Question 50

disadvantages of mean

Answer 50

Affected by one or two extreme results. Usually not a whole number.

Question 51

disadvantages of mode

Answer 51

It does not consider all of the data, therefore it cannot be used for further statistical analysis. There may be more than one modal result, which could cause confusion.

Question 52

disadvantages of median

Answer 52

Calculation from grouped data is complicated. An even number of results means the value is approximated. It cannot be used for further statistical analysis.

Question 53

measures of dispersion or spread of data

Answer 53

Two sets of examination results gave similar arithmetic mean results. To see the significance of this we have to examine the spread (dispersion) of data. This can be done in a number of ways. The easiest to understand is called the range.

Question 54

range

Answer 54

the difference between the highest and lowest value. The range is the easiest and most widely used measure of data dispersion. The main problem with this measure is that it can be distorted by extreme results. it is sometimes useful to exclude the highest and the lowest result. range = highest result - lowest result

Question 55

coding

Answer 55

process of labelling and organising qualitative data to identify the main themes and the links between them.

Question 56

analysis of qualitive data

Answer 56

qualitative data cannot be analysed using statistical techniques because they are based on opinions, attitudes and beliefs. They should be categorised into types of response. Analysing relationships will help a business to plan marketing strategies.

Question 57

Interpretation of information presented in tables

Answer 57

allow easy reference to the data and can be used to present a mass of data in a precise way.

Question 58

Interpretation of information presented in charts

Answer 58

used where data needs to be presented so that the proportions of different sets of data in relation to the total are clearly shown. Each section of the ‘pie’ shows how relatively significant that part of the data is compared to the whole. Pie graphs allow easy comparison between two sets of results to see if the proportions have changed. The size of each section is determined by the angle at the centre of the circle.

Question 59

Interpretation of information presented in line graphs

Answer 59

most commonly used for showing changes in a variable, such as sales, over time in time series graphs. The line graph allows easy reference to trends in the data and shows up seasonal or other fluctuations clearly.

Question 60

Interpretation of information presented in bar graphs

Answer 60

use bands of equal width but of varying length or height to represent relative values. They allow easy comparison over time or between different items.