Theme 1 - Market Research Flashcards
What will effective market research help a business to do ?
- it will help reduce the businesses risk
- helps them understand how much consumers will pay for a product ( pricing )
- it helps them understand consumer behaviour ( dominos found out they sell more pizzas when it’s raining )
- identify potential competitors
- quantify potential consumer demand for a product ( forecast sales )
How may researching a market benefit a business ?
- carrying out market research reduces risks and costs of making poor decisions
- to develop a marketing plan based on data gathered e.g. where to sell a product to help reach the target audience
- To help the business to react to and prepare for changes in the market
- To help the business to become market orientated
What is primary market research ?
• Primary research is collecting data first hand
• This means NEW data is gathered for the benefit of the business
• This data will be specific to the needs of the business
What are the primary research methods ?
- Questionnaires (survey)
- Observation
- Customer interviews
- Test marketing
- Focus groups
What is a questionnaire and how does it work ?
A questionnaire is a list of written questions. They are very common in market research and are used to record the views and opinions of respondents.
• Have a balance of open and closed questions.
• Closed questions allow respondents a limited range of responses. An example would be ‘How many times have you flown with Emirates this year?’ The answers to closed questions are easier to analyse and represent numerically.
• Open questions let people say whatever they want. They do not have to choose from a list of responses. Open questions are best used if there are a large number of possible responses. An example would be ‘How would you improve the quality of service provided by Emirates?’
• Contain clear and simple questions. Questions must be clear, avoiding the use of jargon, poor grammar and bad spelling.
• Not contain leading questions. Leading questions are those that ‘suggest’ a certain answer. They should be avoided because otherwise the results will be biased.
• Not be too long
What is the observation primary research strategy ?
This is where market researchers ‘watch’ the behaviour of customers. This approach might be used in retail outlets. Observers might record the amount of time customers spend looking at particular products and displays in the store. However, because there is no feedback when using this method a lot of questions go unanswered.
What is the test marketing research strategy ?
This involves selling a new product in a restricted geographical area to test it before a national launch.
After a period of time feedback is gathered from customers.
The feedback is used to make modifications to the product before the final launch. This reduces the risk of failure.
What is the focus group primary research strategy ?
If a business wants very detailed information from customers it might use focus groups or consumer panels. A focus group is where a number of customers are invited to attend a discussion led by market researchers. The group must be representative of the whole population and be prepared to answer detailed questions. This is a relatively cost-effective method of collecting information but the group may be a little small.
What are the secondary research methods ?
- Government sources
- Trade publications
- Market reports
- Internal sources
- Newspapers, magazines, tv, radio etc
What is the government sources ( secondary research ) ?
• Office of national statistics (ONS) is very useful demographic information and data on the market or industry that the business is in
• Information can be used to make decisions about expanding overseas for example
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
It is when a company makes products from the resources that they have at their disposal and this means that they might not take into count the needs and wants of the user but obviously they usually do because it’s very important.
When is product orientation appropriate?
Product orientation is appropriate when:
• There is little competition in the market, the business can make what suits its production capacity
• When there is limited consumer knowledge e.g. dental fixtures, braces etc.
• When there is low disposable income of consumers, when funds are limited customers will buy what is available
Give some examples of product orientation
In for e.g. apple, controls the market as they just release new products with new features and people are just like wow let’s buy this and the market doesn’t dictate what apple makes although it can obviously slightly influence it.
• Apple create iPhones and iPads and create innovative products, but they create and make what they can, not what consumers want
• This is because consumers may not know what they want from technology that has not yet been invented!
• Also consumers may want what is not yet possible e.g. a battery which charges to 100% in 5 minutes
How does product orientation work with Gillette ?
• Gillette makes a range of razors that they are able to make, not that are specific to customer needs
• Customers have limited knowledge of razors and razor technology
What is market orientation ?
Market orientation is when the consumer is the most important factor when providing products for the market, the business has a sensitivity to customers requirements.
What does a business that is market orientated do?
A market orientated business will focus on the needs of the consumer e.g. the customer can choose the colour of their new car, it doesn’t have to be black anymore
Give examples of market orientation
• ASDA – Chosen by you range
• Each Chosen By You product was tested by a minimum of 50 consumers in a single location
• The Chosen By You range is made up of more than 3,500 own brand food products, 500 of which are entirely new and another 1,000 of which have been reformulated.
• Together they account for between £8-9bn worth of annual sales – so not only is this the most significant food development at Asda – it is the single largest own label re- launch ever in UK retailing history.
