understanding markets and customers

Question 1

what does marketing research closely link with

Answer 1

• research and development
• market segmentation
• customer service
• sales forecasting
• budgeting
• cash flow forecast

Question 2

types of market research

Answer 2

• primary
• secondary

Question 3

sources of primary data

Answer 3

• observations
• postal surveys
• telephone interviews
• online surveys
• focus groups
• face to face surveys
• test marketing
• experiments

Question 4

what is a focus group

Answer 4

group pf people are asked about their perceptions, opinions, beliefs and attitudes towards a product, service, concept, advertisement, idea or packaging

Question 5

benefits of primary market research

Answer 5

• designed specifically to meet business’ need.
• up-to-date and relevant
• kept private to business
• provides more detailed insights into customer views

Question 6

drawbacks of primary market research

Answer 6

• expensive to obtain
• time consuming and needs to be analysed
• risk of survey bias
• sampling may not be representative of wider market

Question 7

sources of secondary data

Answer 7

• google
• government departments
• trade associations
• trade press and magazines
• competitor websites and marketing material
• market research reports

Question 8

benefits of secondary data

Answer 8

• often free but usually cheaper
• good source of market insights as data has already been analysed
• quick to access and use

Question 9

drawbacks of secondary data

Answer 9

• can become quickly out of date
• not tailored to specific business needs
• specialist reports often quite expensive

Question 10

what is quantitative data

Answer 10

• based on numbers and figures
• easier to analyse but doesn’t provide in-depth info

Question 11

what is qualitative data

Answer 11

• based on opinions, attitudes, beliefs and intentions
• more in depth info but difficult to analyse

Question 12

market size

Answer 12

• 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

Question 13

market growth

Answer 13

• key indicator for existing and potential market entrants
• can be calculated using either value or volume

Question 14

market share

Answer 14

• 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

Question 15

types of sampling

Answer 15

• random sampling
• quota sampling
• stratified sampling

Question 16

what is random sampling

Answer 16

• every member of population has an equal chance of being selected
• doesn’t target any specific segments of the market

Question 17

strengths of random sampling

Answer 17

quick and easy and less change of bias

Question 18

weaknesses of random sampling

Answer 18

not representative

Question 19

what is quota sampling

Answer 19

• based on specific characteristics - age, income, location etc.
• required number of respondents drawn from each segment

Question 20

strengths of quota sampling

Answer 20

• more likely to be representative of whole market
• might need fewer respondents

Question 21

weaknesses of quota sampling

Answer 21

• not random so could mean bias

Question 22

what is stratified sampling

Answer 22

• 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

Question 23

strengths of stratified sampling

Answer 23

• ensures respondents are representative of whole market

Question 24

weaknesses of stratified sampling

Answer 24

• takes more time and resources to plan so likely more expensive

Question 25

factors influencing the choice of sampling methods

Answer 25

- 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

Question 26

what is a correlation

Answer 26

strength of a relationship between two variables

Question 27

what is a correlations measured on

Answer 27

scatter graph

Question 28

what axis is the IV plotted on

Answer 28

x-axis

Question 29

what axis is the DV plotted on

Answer 29

y-axis

Question 30

types of correlation

Answer 30

- positive (IV and DV go up) - negative (IV goes up and DV goes down) - no correlation (no relationship)

Question 31

what does a confidence interval do

Answer 31

- helps a business evaluate the reliability of a particular estimate

Question 32

how are confidence intervals used

Answer 32

- 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

Question 33

what is extrapolation

Answer 33

using historical data to make judgements

Question 34

how to carry out extrapolation

Answer 34

1) identify trend 2) draw line of best fit 3) continue trend into future 4) use trend to make decisions

Question 35

advantages of extrapolation

Answer 35

- simple method of forecasting - not much data required - quick and cheap

Question 36

disadvantages of extrapolation

Answer 36

- unreliable if significant fluctuations in historical data - can't assume trends will continue into the future - ignores qualitative factors