The purpose of market research

Market research involves:

Gathering

Analyzing

Presenting of information regarding the marketing and consumption of goods and services. In
other word, this is about finding the expectations of customers. Market research can be
expensive. The main purposes of market research are:

1.To identify and understand customer needs- For e.g., a chocolate manufacturer will need to
find out what kind of chocolate is most popular among potential customers etc.

Market research helps a business to anticipate customer needs, this means that the information
gathered helps them to predicts what customers expect.

2.Identify gaps in the market

A market gap exists when there are a set of customers whose expectations are not satisfied or
overlooked my manufactures. Finding an untapped market can be hard, however market
research can help find a market gap. If it is a profitable market gap, a business can increase the
revenue by catering to that specific segment.

3.To reduce risk

By anticipating the expectations of customers, the probability of failure of a product or an idea is

reduced.

4. To inform business decisions

Market research can provide a wide range of information that could be used to improve decision
making. For example, deciding what price to set.

Ms. Seuwandi Market research Edexcel 9-1

Methods of primary research

Primary or field research is gathering “new” information that does not already exist. Some of the
methods of gathering primary data are:

1.Questionnaires
A questionnaire is a list of written questions. Vey common in market research and records
opinions of respondents

Features of a good questionnaire:

• Has a combination of open ended and closed ended questions?

• Questions are easy to understand and simple
• Questions do not include jargon (technical words)
• Short questionnaire, because if the questionnaire is long, respondents might lose interest

Questionnaires can be used in different situations

• Postal surveys
• Telephone interviews
• Personal interviews
• Online interviews

Ms. Seuwandi Market research Edexcel 9-1

2.Focus groups
A focus group is a group interview. It can take place in person or online. In a focus group, people
are asked questions or given scenarios and asked for their opinions about a product or service.
Their replies provide businesses with more in-depth information than questionnaires.

The size of the group is important. If the group is too small, not enough opinions will be gathered.
If the group is too big, some people may not get a chance to contribute.

3.Observations
Observations involve watching customers to find out their reactions to certain products or
services. For example, this could involve watching someone try a drink for the first time or
monitoring which products a customer notices first when they go into a shop.

4.Test marketing
This involves selling a product in a restricted geographical area to test it and sales level before a
national launch. During the test marketing, feedback can be gathered regarding the product. This
will provide the opportunity for a business to improvise and update the product before the
launch and avoid a massive failure

However, test marketing has its problems. The feedback gathered from a limited geographical
area may not be representative of the whole population.

Advantages of primary research Disadvantages of primary research

Specific to the business Time consuming

Provides detailed information Expensive

Relevant and up to date Sometimes difficult to collect

Can gather a mixture of quantitative and qualitative data

Ms. Seuwandi Market research Edexcel 9-1

Methods of market research – secondary research
There are two main types of market research – primary and secondary. Secondary market
research, also known as desk research, involves gathering existing data that has already been
produced. Secondary research can be collected from both inside (internal) and outside (external)
a business. Internal research could include financial or marketing information, such as how many
people previously responded to an advert sent out by the business. External research could
include information from internet research, market reports and government reports.

Internet research

Internet research includes data taken from competitors’ websites, newspaper articles and social
media. This provides a business with an overview of information relating to its industry and the
types of products and services other businesses offer.

Market reports

Market reports are industry specific. They may give specific information about an industry as a
whole. An example of information that could be found in a market report would be ‘46 per cent
of adults aged 35–50 visit a coffee shop at least once a month’. This could help a business decide
which customers to target.

Government reports

Government reports may consist of general information that is not usually industry specific but
can still be useful for a business. Examples include ‘60 per cent of people aged 16–25 would
consider working for £6.50 per hour’ or ‘25 per cent of the population is now aged 60 or above’.
A business may use this information to decide what level of pay to offer potential employees,
who its target market will be or what kinds of

Ms. Seuwandi Market research Edexcel 9-1

These are some forms of secondary research

Advantages and disadvantages of secondary research

Ms. Seuwandi Market research Edexcel 9-1

Market research produces data that can be categorised as qualitative or quantitative data.

Data collected from market research

Qualitative Quantitative

Qualitative data:
• is usually expressed as opinions
• includes descriptive information
• is gained using open-ended questions, eg ‘What do you like about the product and why?’
• It provides a business with detailed information that cannot be expressed in a graph or
chart. While qualitative data gives detailed information, it can be time consuming and
costly to gather and analyse.

Quantitative data:
• is usually numerical data
• is gathered through the use of closed questions, such as ‘yes’ or ‘no’ responses, multiple-
choice options or a rating system
• can generally be expressed in a graph or chart
• It has the benefit of being simple and quick to analyse. It can also be analysed in a way
that gives easy-to-understand results. However, quantitative data lacks specific opinions
and doesn’t always allow a business to see exactly what its customers think.
• Using data in market research – the role of social media

Ms. Seuwandi Market research Edexcel 9-1

Using data in market research – the role of social media
As well as using internet research, market reports and government reports, businesses gather
market research data through social media. Through social media businesses can reach huge
numbers of customers and it allows them to conduct research cheaply and on a large scale. There
are several social media platforms and each gives access to local, national and international
customers.

Some of the benefits of using social media for market research include:

• it is cheaper than other forms of research, such as using a market research agency, and
can often be free
• it can save time putting information together, eg some online questionnaires put the
results into a graph instead of the researcher doing this themselves
• it allows businesses to spot the latest tastes and trends, and monitor the behaviour of
their competition
• This research could lead to a business bringing out a new product or offering a discount
to match its competitors. Without social media, it would be more difficult to find out how
tastes and trends are changing, and what competitors are doing.

Ms. Seuwandi Market research Edexcel 9-1

Example of the use of social media in market research

A hairdresser asks their followers to complete a short questionnaire. In return, the business could
offer entry into a competition to win a free haircut. In this way, the hairdresser quickly gets access
to valuable information about the wants and needs of their target market for a low cost.

Reliability of market research data

Having reliable market research data is essential. Basing decisions on unreliable research can be
very costly to a business.

For research to be reliable, it must have a high level of validity. This means that the facts and
evidence gathered are accurate.

The advantages of having reliable market research data include:

• the business can make properly informed decisions reduces risk

• means less money is wasted
• gives a higher chance of business success

The consequences of relying on unreliable market research data include:

• the business making unwise decisions

• it could ultimately cost the business money
• the business could bring out products that don’t sell the business could fail

Ms. Seuwandi Market research Edexcel 9-1

(e) Explain one reason why secondary research would be used by a business. (3)

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Huawei is a leading global provider of information and communications technology,

infrastructure and smart devices. In March 2011, over one million of its C8500 smartphones

were sold in China following its launch.

It now manufactures a wide variety of different products including Huawei smartphones,

watches and tablets. In recent years Huawei has won many awards. In 2018 it was named

the 68th most valuable brand by Best Global Brands. In 2019 it introduced a smartphone

which had new photographic technology.

(c) Evaluate why Huawei would carry out market research before designing a new product. You
should use the information provided as well as your own knowledge of business. (12)

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Ms. Seuwandi Market research Edexcel 9-1