Market research

Definitions to learn
Product oriented businesses - businesses, whose main focus of activity is on the product itself.
Market oriented business - businesses that carry out market research to find out consumer
wants before a product is developed and produced.
Marketing budget- it is a financial plan for marketing of a product or a range of products over a
specified period of time.
Market research- it is the process of gathering, analysing and interpreting information about a
market.
Primary research - it is the collection of original data directly through existing or potential
customers. Also called field research.
Secondary research-it is the use of information that has already been collected, analysed and is
available for the purpose of others. Also known as desk research.
Questionnaire - it is a set of questions to be answered as a means of collecting data for market
research.
Sample - it is a group of people who are selected to respond to a market research exercise.
Random sample -it is when people are selected at random as a source of information for market
research.
Quota sample -it is when people are selected based on certain characteristics or preferences as
a source of information for market research. Such as based on income, age, gender etc
Focus group - it is a group of people who are representative of the target market.
Observation - it involves recording, watching and carrying out audits to collect information for
market research.

Importance of market research

Identify features that people like and dislike and add them to products.
Identify the place where customers are willing and able to purchase the products.
Identify the price that customers are willing and able to pay for the products
Identify the promotions that would be effective to attract potential customers and retain existing
customers.
Competitor's product details
Identify the type of customers who are likely to purchase the business's products

Remember:
Market research information should be qualitative (information that provides numerical values
which could be analysed statistically) and quantitative (information which provides opinions or
judgements)
PRIMARY MARKET RESEARCH
01. Questionnaire
(+) Qualitative information can be gathered
(+) can be carried out online so it is cheaper and easier to collect info
(+) can be linked to price draw websites or competitions to encourage people to fill in the
questionnaires
(-) time consuming and costly
(-) questionnaire bias questions which returns answers that would mislead the business

02. Interviews
(+) can explain the questions that the interviewee doesn't understand
(+) qualitative information about what interviewee like and dislikes
(-) interviewer bias
(-) time consuming and costly

03. Focus groups

(+) provides detailed information about customer opinions and views
(+) specialized sometimes
(-) biased is people in the panel are influenced by the opinions of each other
(-) costly and time consuming

04. Observation
(+) cheaper method
(-) basic figures that doesn't provide the reason for consumer buying decision
(-) might behave differently if noticed that they are being observed
(-) cannot gain qualitative information from each customer

SECONDARY MARKET RESEARCH

01. Government statistics
- general information such as population structure, age structure,

02. Newspapers
- general state of the economy. Are consumers likely to increase or decrease spending, are
prices likely to inflate or deflate etc.

03. Market research agencies

- carries out market research on behalf of the business, therefore saves time for other business
work, but could be costly.

04. Internet
- easily accessible, less costly, could be used to ensure that primary research data is correct,
and a wide range of sources available to collect data. But it could be less accurate or even
mislead the business since different sources could give different conflicting information.
PRIMARY RESEARCH VS SECONDARY RESEARCH

Primary research
(+) high accuracy - first hand collection of data
(+) fit for purpose
(+) not used by competitors

(-) time consuming

(-) costly
(-) cannot guarantee accuracy if wrong sample size, wrong sample type, bias, person who
carried out the research etc. Therefore specialized knowledge and experience may be needed
to carry out research.

Secondary research
(+) less costly
(+) less time consuming as already available for use
(+) might have been carried out by specialists
(+) can be used as a source to verify primary research information

(-) less accurate as information can be too old, not first hand data, or biased etc
(-) might have been already used by competitors so could be less useful
(-) not fit for purpose

Accuracy of market research information depends on:

- how the questions were phrased - use simple language, appropriate flow of questions, use of
tick boxes for unethical questions such age, income etc, short and clear questions, etc
- level of experience of the person who carried out the research
- age of information
- bias or not
- type of sample -random or quota
- size of sample - too small sample size would make it difficult to make a correct decision.
Larger the sample size, greater the accuracy.

Presentation of market research information

01. Tally chart or table -used to record data in its original form.
02. Chart - shows total figures or as a percentage of the total figure for each piece of data.
03. Graph - used to show the relationship between two sets of data.