Unit 3.2 - market research

Question 1

Why do businesses use market research?

Answer 1

1. Gives better understanding of its potential target market, allows firm to develop products to satisfy consumer needs & wants. Can increase sales.
2. Informs them of what the competition is doing (can help chose marketing strategy)

Question 2

What is primary research?

Answer 2

Research which has been conducted for the first time and for a specific purpose. Business collects original data to answer specific questions.
+ data is relevant to firm’s specific product; gives it advantage over competitors as the information learned may allow the business to develop USP; gives business more control over how data is collected, more accurate?
- expensive, takes a long time, requires additional resources; people may be dishonest/not wish to participate

Question 3

4 methods of primary market research

Answer 3

1. Interview: one-to-one discussions + detailed questions can be asked; provides specific info about consumer’s needs - time-consuming; limited amount of people can be interviewed
2. Postal questionnaires: asking a list of questions through a form send by mail + as everyone is asked the same questions, it’s easy to compare; quantitative data is good. - cost for business to send by mail; may be inefficient
3. Online survey: asking questions through website/social media + minimal costs, quantitative data can be analysed & interpreted quickly - easy to ignore; false info may be given
4. Focus group - groups of consumers discussing different aspects of product. + good source of qualitative data; quicker & cheaper than individual interviews - does not represent whole market; still time consuming & pricy

Question 4

What are the 2 types of sampling?

Answer 4

1. Random sampling - cheap and effective, may result in not target customer being picked
2. Quota sampling - participants and separated into groups that share common characteristics. Specific number of participants are picked for each group. Time consuming but more targeted.

Question 5

What is secondary market research?

Answer 5

Research that already exists but was conducted for another purpose. Can give valuable info about potential consumers.

Question 6

2 sources which secondary info comes from

Answer 6

1. Internal - produced by business but not for market research purpose. E.g. sales records, workforce feedback
2. External - produced outside organisation e.g. government online sources, university studies

Question 7

3 main types of external secondary market research

Answer 7

1. Online sources: + free, save time - info may be biased/out of date
2. Government sources: + more reliable since it can’t be edited by others, usually free - info not collected for specific purpose, outdated
3. Commercial market report: + detailed, updated - expensive, not specific to individual

Question 8

Factors affecting accuracy of market research

Answer 8

1. Validity - doesn’t suit purpose
2. Reliability - people may not be honest
3. Accuracy - open questions may not be accurate due to human error
4. Shelf life - time period
5. Sampling - may be too small/not represent population
6. Bias - misleading due to prejudices/trying to change perceptive