Theme 1.1.2: Metting Customer Needs - Market Research Flashcards
What is Market Research?
The process of gathering data in order to understand current and future customer needs and the nature of the market, this process reduces the risk involved in developing new business ideas
What can Market Research be used for?
. To investigate consumer wants and preferences
. To investigate potential levels of demand
. To investigate consumer motivation
. To gain feedback
. To find gaps in the market
. To gain a competitive advantage
Product Orientation
When a business focuses on creating a product rather than responding to the needs of the market, the priority is to develop a great product
Examples of how primary data is gathered
. Questionnaires
. Surveys
. Focus Groups
. Interviews
Examples of secondary research sources
. Government Statistics . Office of national statistics . Trade Journals . Customer records . Competitors Accounts . Accounting data
What does Market Research result in a reduction of?
Risk when developing new business ideas
What does market research aim to provide?
. Market information through analysing patterns and trends
. Customer preference
. Information regarding customer behaviours and motivation
. To provide information on potential gaps in the market
. Insight on competitors
. Insight on selling price
. To judge and assess success
What can market research lead to?
. Better informed decisions
. Minimisation of risks
. Prediction of expected sales
. Gaining a competitive advantage
Product Orientation
A businesses concentrates its efforts on creating the product rather than responding to market needs, the priority is to make it THEN sell it
Market Orientation
A business concentrates its efforts on customer preferences and decisions are based on a good understanding of the market
Primary Research (Field)
Collecting data directly from the original source by asking specific and relevant questions
Methods of Primary Research
. Surveys
. Questionnaires
. Focus Groups
. Interviews
Secondary Research (Desk)
The gathering of data from pre-existing sources such as online and paper based
Methods of Secondary Research
. Government statistics
. Trade Journals
. Internal Sources
. Newspapers
Advantages of Primary Research
. Can be designed to meet exact needs
. Information is specific, relevant and up to date
Disadvantages of Primary Research
. Can be expensive and time consuming
. Care must be taken to avoid errors
Advantages of Secondary Research
. Work already done by someone else
. Possibly of a better quality than you are capable of
. Easy and cheap to collect
Disadvantages of Secondary Research
. May not fit the exact needs you require
. May be out of date or inaccurate
Quantitative Research
Involves numerical data gathering or analysis
Qualitative Research
Discovering genuine thoughts and opinions usually through written or verbal data
Bias
When s sample includes disproportionate numbers of people from a particular market segment
Limitations of Market Research
. Can only give accurate data if the questions asked are well designed and are not leading
. Samples have to be big enough so that they reflect the target market without being too big and costly
. Sample bias can lead to wrong data
. Hard to do in areas you are not familiar with e.g a foreign market
. Almost useless in dynamic markets as the second its printed it may be completely irrelevant
Use of ICT in market research
. Huge data bases of customers can be created
. Online questionnaires can be filled out for cheap
. Specific advertising can be used to target certain people to measure their interest
Market Segmentation
The way markets can be divided up into segments, each of which can have massively different customer preferences e.g Aldi vs M and S
What segments are markets usually split up into?
Socio-economic grouping e.g: . Age . Gender . Race . Wealth . Education . Hobbies . Interests
Positives of Market Segmentation
. Niche market usually so less competition
. Products can be designed for consumers with distinctive preferences
. More likely to have repeat purchases due to a loyal consumer base
Negatives of Market Segmentation
. Producing for specific markets can raise production costs and prices
. Selling in a wide range of markets can be costly
. Focusing on a mass market with a standardised profit can be more profitable
