GCE Business

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MARKETING RESEARCH
Market Research
 Market research is the process of collecting, recording
and analysing data about the customers, competitors
and the market

Market research is important to businesses because,

- It helps reduce the risks associated with new product
launches
- It assists predicting future demand changes
- It helps explain patterns in sales of existing products and
market trends
- It helps to assess the most favoured designs, flavours, styles,
promotions and packages for a product
The market research process
1. Management problem identification

Here are some examples of problems that might be

investigated by market research,

 What size is the potential market for this business?

 Why are our sales falling?
 How can we break into the market in another country?
 How can we most effectively meet the challenge of new
competitors?
 What customer groups buy our products and which groups
tend not to buy them?
 The market research process
2. Research objectives

Here are some examples of market research objectives,

expressed in the form of questions that need to be answered
through research,
 How many people are likely to buy our products in country X?
 If the price of good Y is reduced, how much will this increase
sales volume?
 If we advertise this product on television, what will be the likely
impact on sales volume and market share?
 Which new product idea, A or B, is likely to generate more
sales?
 What would be the impact of new packaging on sales of our
product?
 Why are consumer complaints about our products increasing?
The market research process
3. Sources of data – primary and secondary research

 Primary research is the collection of first-hand data

that is directly related to a firm’s needs

 Secondary research is the collection of data from

second-hand sources
Sources of secondary data

 Government publications
 Local libraries and local government offices
 Trade organisations
 Market intelligence reports
 Newspaper reports and specialist publications
 Internal company reports
 The internet
Secondary research
Advantages
 Often obtained very cheaply May not be updated
– apart from the purchase of
market intelligence reports
• Obtainable quickly without
the need to devise
complicated data-gathering
methods
• Allows comparison of data
from different sourcses.
Disadvantages
frequently and may therefore
be out-of-date
• might not be available for
completely new product
developments
• Data collection methods and
accuracy of these may be
unknown.
Primary research
Advantages
• It more useful than most
secondary data as it is up-to-
date.
•It is collected for a specific
purpose, hence directly
addresses to the questions the
business wants to answer
•No other business has access
to this data- it is confidential.
Disadvantages
•It is costly as market
research agencies normally
charge high fees for detailed
customer surveys and other
market report.
It is time- consuming
compared to secondary data
It doubts over accuracy and
validity-largely due to the use
of sampling and the risk that
the samples used may not be
fully representative of the
population.
Methods of primary research

Primary – or field – research can itself be divided

into quantitative and qualitative research.

 Qualitative research is research into the in-depth

motivations behind consumer buying behaviour or
opinions

 Quantitative research is research that leads to

numerical results that can be statistically analysed
Methods of primary research
Qualitative research techniques

 Focus groups – a focus group is a group of people

who are asked about their attitude towards a
product, service, advertisement or new style of
packaging
Methods of primary research
Quantitative research techniques

Observing and recording
Using this approach, market researchers observe and
record how consumers behave

Test marketing
This can take place after a decision has been made to
produce a limited quantity of a new product but
before a full-scale, national launch is made
Methods of primary research
Quantitative research techniques

 Consumer surveys (questionnaires)

These involve directly asking consumers or potential
consumers for their opinions and preferences. They
can be used to obtain both qualitative and
quantitative research.
 Methods of primary research
Who to ask? – sample size and sampling

Sample size
 A sample is the group of people taking part in a market research
survey selected to be representative of the overall target market

In nearly all market research situations it is impossible to seek

evidence from the total ‘population’, i.e. the total potential
market that the firm is aiming at. This is either because that
market is so extensive that contacting everyone in it would be too
expensive or time consuming or it is impossible to identify
everyone in that market.

In all of these cases, in order to undertake primary research, a

sample of the total potential market will need to be chosen.
 Methods of primary research
Who to ask? – sample size and sampling
Sampling methods- Probability sampling

Random sampling occurs when every member of the target population
has an equal chance of being selected

Stratified sampling draws a sample from a specified sub-group or
segment of the population and uses random sampling to select an
appropriate number of each stratum

Quota sampling occurs when the population has been stratified and the
interviewer selects an appropriate number of respondents from each
stratum

Cluster sampling involves using one or a number of specific groups to
draw samples from and not selecting from the whole population, e.g using
one town or region

Systematic sampling refer to a method whereby the sample is selected
by taking every nth item from the target population
 How accurate is primary research?
Unfortunately, the reliability of primary data can often
be called into question. These are the main reasons,

 Sampling bias – results from a sample may be different

from those that would have been obtained if the entire
population had been questioned
 Questionnaire bias – this may occur when questions tend
to lead respondents towards one particular answer
 Other forms of bias – these might include the
respondent not answering in a very truthful way
Market research developments
Increasingly, businesses are turning to electronic
means to gather the data their marketing strategies
require. Not only can questionnaires be sent out,
answered and returned over the internet, but firms
can also access the vast quantity of information that
electronic data retrieval methods offer them.
 Cost effectiveness of market research
Market research is not free – even gathering
secondary research data takes time and buying
market research reports or undertaking primary
research can be very expensive. However, the
increasing use of the internet has made it much easier
to contact a very wide range of potential consumers.
For example,
 Online marketing allows firms to conduct research
projects for a smaller sum compared to older methods