understanding markets and customers Flashcards
what does marketing research closely link with
- research and development
- market segmentation
- customer service
- sales forecasting
- budgeting
- cash flow forecast
types of market research
- primary
- secondary
sources of primary data
- observations
- postal surveys
- telephone interviews
- online surveys
- focus groups
- face to face surveys
- test marketing
- experiments
what is a focus group
group pf people are asked about their perceptions, opinions, beliefs and attitudes towards a product, service, concept, advertisement, idea or packaging
benefits of primary market research
- designed specifically to meet business’ need.
- up-to-date and relevant
- kept private to business
- provides more detailed insights into customer views
drawbacks of primary market research
- expensive to obtain
- time consuming and needs to be analysed
- risk of survey bias
- sampling may not be representative of wider market
sources of secondary data
- government departments
- trade associations
- trade press and magazines
- competitor websites and marketing material
- market research reports
benefits of secondary data
- often free but usually cheaper
- good source of market insights as data has already been analysed
- quick to access and use
drawbacks of secondary data
- can become quickly out of date
- not tailored to specific business needs
- specialist reports often quite expensive
what is quantitative data
- based on numbers and figures
- easier to analyse but doesn’t provide in-depth info
what is qualitative data
- based on opinions, attitudes, beliefs and intentions
- more in depth info but difficult to analyse
market size
- indicates potential sales for firm
- usually measured in terms of both volume (units) and values (sales)
- size of individual segments within the overall market can also be measured
- not normally a marketing objective - since firm cannot influence it
market growth
- key indicator for existing and potential market entrants
- can be calculated using either value or volume
market share
- explains how the overall market is split between the existing competitors
- tends to be calculated based on market value but volume can also be used
- good indicator of competitive advantage
- key is to look for significant +/- changes
types of sampling
- random sampling
- quota sampling
- stratified sampling
what is random sampling
- every member of population has an equal chance of being selected
- doesn’t target any specific segments of the market
strengths of random sampling
quick and easy and less change of bias
weaknesses of random sampling
not representative
what is quota sampling
- based on specific characteristics - age, income, location etc.
- required number of respondents drawn from each segment
strengths of quota sampling
- more likely to be representative of whole market
- might need fewer respondents
weaknesses of quota sampling
- not random so could mean bias
what is stratified sampling
- divides target group into sections, each representing a key group
- each section is samples individually (sample thus created should contain members from each key characteristics in proportion of target population
strengths of stratified sampling
- ensures respondents are representative of whole market
weaknesses of stratified sampling
- takes more time and resources to plan so likely more expensive
factors influencing the choice of sampling methods
- time to complete research + make decisions
- costs involved and financial situation of firm
- stage of life cycle of product
- new or existing product or firm
- target audience
what is a correlation
strength of a relationship between two variables
what is a correlations measured on
scatter graph
what axis is the IV plotted on
x-axis
what axis is the DV plotted on
y-axis
types of correlation
- positive (IV and DV go up)
- negative (IV goes up and DV goes down)
- no correlation (no relationship)
what does a confidence interval do
- helps a business evaluate the reliability of a particular estimate
how are confidence intervals used
- quality management - % reliability of machines, chance quality control samples will detect issues
- market research - statistical estimates for sales forecasting. reliability of data from customer surveys
- risk management + contingency planning - risk of sales forecast not achieved. scenario planning for competitor actions
- budgeting + forecasting - likely range of revenues and costs based on key assumptions. sales forecast to support new product launches
what is extrapolation
using historical data to make judgements
how to carry out extrapolation
1) identify trend
2) draw line of best fit
3) continue trend into future
4) use trend to make decisions
advantages of extrapolation
- simple method of forecasting
- not much data required
- quick and cheap
disadvantages of extrapolation
- unreliable if significant fluctuations in historical data
- can’t assume trends will continue into the future
- ignores qualitative factors
