market research chapter 18 Flashcards
market research
the process of collecting, recording and analyzing data about customers, competitors and the market
what can market research use to measure customer market research
new products
different price levels
alternative forms of promotion
new types of packaging online distribution.
what are the key features a business needs to establish
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?
New product Development process (NPD)
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
identifying consumer characteristics
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.
Explain patterns in sales of existing products and market trends
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.
Predict future demand changes
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.
Assess the most popular designs, promotions, styles and packaging for a product
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.
primary research
the collection of first-hand data that is directly related to the needs of the business.
secondary research
the use of existing data that was originally collected for another purpose.
differences between primary research and secondary research
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.
reasons to choose secondary research
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.
advantages of secondary research data
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
Government (sources of secondary data)
These are usually available for free on the internet.
They may be several years out of date
local government (sources of secondary data)
These are usually available for free on the internet.
They may be several years out of date
industry specific publications by trade organisations (sources of secondary data)
These are not always available for free.
Membership of the trade organisation may be needed to obtain detailed data.
market research agencies (sources of secondary data)
These are often very expensive.
They are not usually updated annually.
internal company records (sources of secondary data)
low cost and immediately available. Secondary data exists within any business.
company reports and accounts (sources of secondary data)
These allow analysis of competitor performance.
Detailed, confidential information is not available from this source.
limitations to secondary research data
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.
qualitative data
non-numerical data, which provides insight into the detailed motivations of consumers and helps to explain their buying behavior or opinions.
quantitative data
numerical results from research that can be statistically analyzed.
advantages of primary research data
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.
questionnaire (primary data collection method)
Questionnaires can include detailed, open questions which give qualitative and quantitative data.
interview (primary data collection method)
Interviews allow personal contact with respondents.
Follow-up questions can be asked.
observations (primary data collection method)
If people know they are being observed, they could behave differently.
test marketing (primary data collection method)
The results might indicate whether the national launch of a new product will achieve sales targets.
focus groups (primary data collection method)
Focus groups encourage debate between consumers about a product or advertisement. Discussion is observed and recorded.
limitations of primary research data
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.
developments in market research
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.
sampling
the process of selecting a group of respondents from a larger population
sample
group of people taking part in market research survey selected to be representative of the overall target market
what is the need for sampling
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.
sample may be too small (limitations of sampling)
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,
sampling bias
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.
researchers may not use the most appropriate methods of sampling (limitations of sampling)
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.
risk of sampling bias (limitations of sampling)
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.
reliability of data collected (issues)
Sampling bias. not answering truthfully. questions may lead to respondents
analysis of data (issues)
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.
averages (measures of data)
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
arithmetic mean
the value calculated by totaling all the results and dividing by the number of results.
mode
value that occurs most frequently in a set of data.
median
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
uses of mean
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
uses of mode
Could be used for inventory ordering purposes
uses of median
Could be used in wage negotiations. often used in advertising
advantages of mean
Includes all of the data in its calculation. The most well-known average; it is widely used and easily understood.
advantages of mode
It is easily observed and no calculation is necessary. The result is a whole number and easily understood.
advantages of median
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.
disadvantages of mean
Affected by one or two extreme results. Usually not a whole number.
disadvantages of mode
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.
disadvantages of median
Calculation from grouped data is complicated. An even number of results means the value is approximated. It cannot be used for further statistical analysis.
measures of dispersion or spread of data
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.
range
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
coding
process of labelling and organising qualitative data to identify the main themes and the links between them.
analysis of qualitive data
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.
Interpretation of information presented in tables
allow easy reference to the data and can be used to present a mass of data in a precise way.
Interpretation of information presented in charts
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.
Interpretation of information presented in line graphs
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.
Interpretation of information presented in bar graphs
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.
