Understanding Customers and Market Flashcards
What is Market research?
Market research is the process of collecting data to help discover if there is a market for a proposed product or service. The data helps firms to make informed and hopefully profitable business decisions.
What can market prove in relation to decision making?
If conducted frequently, appropriately and accurately, market research can prove an invaluable tool in assisting a firm in their decision making.
What is the primary aim of market research?
The primary aim of market research is to reduce the level of risk by providing the information required to make better decisions.
What are examples of Market research?
• Seeing if sales targets have been met.
• Customer reactions to your brands.
• Who customers are buying from and why.
• Identifying changing tastes and fashions.
• Competitor actions.
What does market research not guarantee?
Market research does not guarantee business success.
However, it can reduce risk and make success more likely.
How does market research lose its value?
If managers don’t hold the skills to properly interpret the meaning of data, or lack the financial support to implement marketing plans or the machinery to produce the goods, then market research loses its value.
How can research become quickly obsolete?
Remember also that the market is constantly changing and that research can quickly become obsolete. Tastes and fashions change rapidly!
What are the Stages of the Market Research Process?
- Define needs
- Data collection
- Analyse data
- Interpret findings
- Feedback to managers
- Managers decisions
What is a weakness of the stages of market research?
What does the stages of market research provide firms with?
The stages of market research are time consuming and therefore expensive. However, it does provide firms with the means of improving their market competitiveness through a better appreciation of their customers and the external environment.
What is primary research?
Primary research collects data that is first hand and specific to the needs of your business.
Example of Primary research: info about Questionnaries
• Questions designed to find out specific things
• Risk of bias from interviewer
• Expensive to conduct
• Can be face-to-face or online
Example of Primary research: info about Focus Groups
• Chaired discussions about a theme chosen by the market researcher.
• Often used by political parties to assess views on policy
• Able to assess whether a product appeals to this sample
• Focus group needs to be representative of your target market
Example of Primary research: info about Test Marketing
• Small-scale launch of a good or service in an area of the country chosen to best represent the entire market.
• Able to use feedback to make alterations to the final good or service.
• Allows competitors to see what you are developing.
What are benefits of Primary research?
- Specific to your needs
- You decide what data is required
- Data is up to date and original
What are drawbacks of Primary research?
- Time consuming and expensive
- Risk of bias
- Not immediately available
What is Secondary research?
Secondary research collects data that already exists and is non-specific to your business.
Example of Secondary research: info about Official Publications
• Collections of official statistics and data about the UK population
• For example Census and National Statistics
Example of Secondary research: info about Industry Magazines
• Specialised magazines and journals written to support particular industries
• Contain industry specific data and articles
• E.g. The Grocer
Example of Secondary research: info about Internal Information
• Database profiles built up about customers e.g. Tesco Clubcard
• Assists with targeted marketing.
• Allows profiling of loyal customers
Example of Secondary research: info about Online Desk Data
• Accessing the plethora of online data can be time consuming but valuable
• Customer feedback and comments provide useful feedback
• Risk of information overload!
What are benefits of Secondary research?
- Easily available
- Cheaper to collect
What are drawbacks of Secondary research?
- Data might be out of date/ obsolete
- Not specific to your needs
- Might be biased
Info about quantitative data
• Quantitative data is numerical.
• It is statistically based.
• Quantitative research findings will lead to objective conclusions and hypotheses that can be tested.
• E.g. How many people buy Cadbury Dairy Milk chocolate?
• It is associated with the asking of closed questions.
• This prevents detailed understanding of buying behaviour.
Info about qualitative data
• Qualitative data considers people’s behaviour, motivations and attitudes.
• For example, why did you buy Levi jeans?
• It often involves psychologists who interpret what consumers have to say and the way in which they say it.
• Focus groups, interviews and observations are key components of this approach.
What does market mapping look at?
Market mapping look at the variables that distinguish different brands within a market. This might include price, quality, cost or a firm’s ethical stance.
What can firms use market mapping to identify?
By using market mapping to plot points on a market map a firm can identify gaps in the market and identify where their own products or services are located. By knowing this, a business can target their marketing more effectively.
What are Advantages to Market mapping?
•Helps identifying holes in the market
•Good for analysing competitors
•Promotes market research
What are Disadvantages to Market mapping?
•Just because there is a “hole” it does not mean that there is a demand
•No guarantee of success
•How reliable is your market research?
What is a sample?
A sample is a group of respondents who are selected to be representative of the views of the target market as a whole.
Who would be questioned so a firm could make the most informed business decisions?
Ideally everybody in a target population would be questioned to enable a firm to make the most informed business decisions.
Why are samples used?
Samples are used as it would be almost impossible and very expensive to try and ask the entire population of a market.
If a sample is too large what will happen?
Too large a sample and the research will take too long to conduct and will prove very expensive.
If a sample is too small what will happen?
Too small a sample and the research might produce results that are unrepresentative of the market (statistically insignificant).
Who do large firms have an advantage over?
Large firms have an advantage over SMEs as they can afford to conduct larger samples and collect more accurate data.
Why the size of the sample is very important?
The size of the sample is very important to ensure that the results are statistically significant.
What happens if there is a bigger sample size
what do small firms have to balance?
The bigger the sample size the more accurate the results are likely to be but also the more expensive the research costs!
Small firms especially have to balance costs against accuracy.
What percentage of confidence in your sample results are considered to be good enough?
And what can it be gained by?
Generally, 95% confidence (the data is correct 19 times out of
20) in your sample results are considered to be good enough and this can be gained through a relatively small sample size.
What does market analysis help a business gather?
Market analysis helps a business to gather data which can be used to support their marketing strategies.
What’s more likely to happen if there is more evidence and data?
The more evidence and data that a business holds about the market, the more likely it is that their marketing strategies will succeed. It is important for a business to try and recognise patterns in sales data.
