BUSINESS IG:

Chapter 11: Market Research

Section 3.2.1 The Role of Market research
results
Section 3.2.2 Presentation and Use of Market
Research Results
 3.2.1 THE ROLE OF MARKET
RESEARCH AND METHODS USED:

• Market Research: the process of collecting, recording and analysing data about the customers, competitors and market for
a product.
• Provides the business with important information about the markets in which they operate, or are planning to operate in.

• Provides information about: • This information obtained from market research helps a business to:
 its customers  Find out what customers like and dislike about their products

 Its competitors  Identify consumer tastes and preferences

 Its market  Decide on the best promotion, packaging and distribution methods for
its products
 Identify the main competitors and what is special about their products –
this is known as the product’s unique selling point
• Know the size of the market
• Explain the reason for the sales of its current products
• Predict how the demand for its products may change in the future
 • In today’s business world most firms are market-orientated.
This means the decision about what to produce is based on
consumer demand for products as identified by market
research.
• This is a very different approach to product orientated
businesses. With this approach it is the business which
decides what to produce and after doing so tries to find
MARKET- customers who want to buy the product.
ORIENTATED There are 2 main benefits of a market-orientated approach:
BUSINESS:
1. The risk of new products failing is reduced because they
have been produced following market research which
identifies the needs of consumers.
2. Products that meet the needs of consumers are likely to
last longer in the market than goods which have been
produced using a product-orientated approach. This leads
to higher sales and profits.
 USES OF MARKET RESEARCH
INFORMATION:
• Market research information can be used by a business to:
 Identify consumer needs. This reduces the risk when developing and launching new products because the
product has been designed and produced based on the market research information provided by potential
consumers of the product.
 Discover the current and future market size for the product.
 Provide information about the business’s existing products and markets.
 Identify the strengths and weaknesses of competitor products. This information. Can be used to make
sure that any new product development builds on the strengths of competitor’s products while improving
on the weaknesses. The aim is to produce a better product than competitors and lead to a successful
launch of the product into the market.
 Decide on how to price the product, promote the product and how best to distribute the product to
customers.
 Predict how changes and trends in consumer tastes and fashion may affect the future demand for
products.
 PRIMARY RESEARCH AND
SECONDARY RESEARCH:

• Primary research: (also called field research) involves

collecting data first-hand, (interviewing people in the
street). This data is collected by an organisation for the first
time and for its own specific needs.
• Secondary data: (also called desk research) uses data that
already exists, (data that the organisation holds in its
records about existing customers. However, most secondary
data has usually been collected by another organisation and
for a different purpose.
SOURCES OF SECONDARY RESEARCH
DATA:

Internet

Market
Government
research
publications
agencies

Sources of
secondary
market
research data

Newspaper
Local library and
magazines

Internet
business
records
 SECONDARY RESEARCH SOURCES
CONTINUED…
Internet – data and information about
almost any topic are available on the
internet and can easily be found using
search engines such as Google. Many
businesses also have their own websites
which can be useful sources of
information.
Libraries – large towns and cities in many
countries have a public libraries giving
free access to printed materials and often
internet access.
Government publications – most
Newspaper and magazines – these report
governments publish data and
information about the local, national and
information related to their own country,
international economies. Most
(population statistics and the support
newspapers have a business section, and
available to businesses. Increasingly this
many magazines are specific to a
information is available from official
particular industry.
government websites.
Business records – businesses collect
information about their customers, which
they might keep on a computer database.
Market research agencies – these are
These records might include information
companies whose business is the
such as the customer’s name, address,
collection and analysis of market data
what they purchased and when they made
which they sell to other businesses.
their last purchase from the business. Past
financial records might also be a useful
source of secondary data.
BENEFITS AND LIMITATIONS OF
PRIMARY AND SECONDARY
RESEARCH:
 METHODS OF PRIMARY RESEARCH:

QUALITATIVE RESEARCH: “RESEARCH INTO QUANTITATIVE RESEARCH: “RESEARCH

THE IN-DEPTH MOTIVATIONS BEHIND THAT LEADS TO NUMERICAL RESULTS THAT
CUSTOMER BUYING BEHAVIOR OR CAN BE STATISTICALLY ANALYSES.”
OPINIONS.”
 D ATA CO L L ECT I ON METH O DS:

• Focus Groups: “a group of people who are asked about their attitude towards a product, service, advertisement or new style of
packaging.” (widely used method of obtaining feedback about new products, new brand names, new advertising and so on, before they
are launched on to the market.)
• Main limitations – it can be time-consuming to arrange and there is no numerical data collected, which makes statistical analysis
impossible.
• Observation: The behaviour of customers is secretly observed and recorded by market researchers. This methods of primary research is
often used by large supermarkets who observe the behaviour of customers as they select their products from many options available on
the shelves.
• Main advantage – in primary research, what consumers do is often more accurate than what they say they do when answering questions
asked by interviewers or questionnaires.
• Main limitation – it is often more expensive than other methods because of the need to have trained observers to analyse customer
behaviour and there is no opportunity to ask consumers why they behaved as they did.
• Test Marketing: a limited quantity of the product is produced and sold in a carefully selected area of the market. The test market is
chosen to represent the total market. Feedback from customers is used to make changes to the product or other elements of the marketing
mix, such as ( pricing, promotion, and place where product is sold), before launching the product to the main market.
• Main advantages – the cost of any problems is limited to smaller output (the quantity produced for the test market) identifying and
solving problems in the test market increases the chance of a more successful introduction of the product into the main market.
• Main limitations – it takes longer to get the product to its main market and the costs of producing products for the test market makes this
method more expensive than the other methods.
 D ATA C O L L E C T I O N M E T H O D S C O N T I N U E D :

• Consumer Surveys: surveys can collect both qualitative and quantitative data, often with the aid of questionnaires. There are several
methods used to survey consumers or potential consumers including:
 Interviews, a trained interviewer asks questions to an interviewee and records their answers. The interview might take place in the
street, in the business, etc.
• Main advantages – the interviewer can explain any questions that the interviewee does not understand and they can often tell if the
interviewee is replying honestly, if not then their responses can be ignored and this reduces the risk of collecting inaccurate data.
• Main limitations – it is more expensive than some of the methods if trained interviewers are used. If they do not make use of trained
interviewers, bias data may be collected.
 Postal surveys, questionnaires are posted to people’s homes and they are asked to complete and return them. This is a good way of
getting the views of a population spread over a wide geographical area and is cheaper than the interview method. However, postal
surveys are often seen as :junk mail” and thrown away. This produces a very low response rate. The results of postal surveys might
also contain bias because only those people with a real interest in the subject of the survey bother to reply.
 Online surveys, many businesses now use the internet and their own websites to carry out surveys.
• Main advantage – they cover a very wide geographical area, anyone with internet access can take part. Also, the results are typed
into an online questionnaire and can be instantly collected and analysed.
• Main limitations - similar to those of postal surveys, they are often seen as electronic “junk mail” and the risk is that only those with
interest in the subject take part in the survey and the results cannot be relied upon as representing the views of the whole population.
 THE NEED FOR SAMPLING:

When carrying out primary research it is often too expensive and too time-consuming
to get the views of every consumer in the market.
This problem can be overcome by selecting a sample from the total market.
There are different methods of sampling: stratified sampling, random sampling and
quota sampling.
The method chosen must produce a sample which is representative of the whole
population. If the sample chosen is not a representative of the whole population, then
it may produce results which are biased and misleading.

• Sample: “a representative sample of the target market selected to take part in

marketing research.”
 ACCURACY OF MARKET RESEARCH:

• We have seen how important it is for businesses to collect, record and analyse market research data
to help in the decision-making process. However, if it is important for users of market research data
to recognize that the data may sometimes be inaccurate. This can be due to:
1. The sample chosen may be too small or not representative of the population
2. The business may have chosen the wrong type of method to collect the data.
3. People who are interviewed as part of the market research process may not answer questions
truthfully.
4. When a survey involves an interview, the interviewer may ask questions in a way that encourages
the interviewee to give an answer that does not reflect their true view.
5. The language used by the interviewer, or used in a questionnaire, may be unclear or difficult to
understand.
6. The data may be recorded incorrectly, or numerical analysis carried out incorrectly.
7. Secondary data may be out-of-date
8. Secondary data may have been collected for a different purpose to the one it is now being used
for.
 3.2.2 PRESENTATION OF THE
MARKET:

• Once the market research has been carried out, the results need
to be presented and analysed.
 Qualitative research, such as that obtained from a focus panel
or test market, is usually presented in the form of written
reports. Managers use these when making decisions about what
to do next. (this includes whether the product design should be
changed, or if they need to change the colour of the
packaging.)
 Quantitative research, consist of data, usually lots of numbers.
On their own the numbers have little meaning. So, the data has
to be presented in a way that users will understand and be able
to use. (this includes tables, charts, graphs and pictograms)
 TABLES:

Advantages:
1. Large amounts of data can be grouped and presented more
clearly
2. It is easy to extract numerical data.
Disadvantages:
3. They lack visual impact
4. Too much data in a table can make it difficult for users to
understand
The disadvantages can be overcome by presenting the numerical
data in charts and graphs
 BAR CHARTS:

• The data is shown in columns. The bars can be drawn

vertically or horizontally. The length of each bar shows the
size of each answer. The height or length of bars can easily be
compared.
Advantages:
 You can easily see the importance of each piece of data
 You can read numerical values from the axis
However, there are also disadvantages:
 When the data values of the parts are very similar, it is difficult
to compare the different parts and the chart lose visual impact.
 PIE CHART:

• Pie charts are drawn as circles. Each part of the data is shown as a
“slice” of the pie. Each ”slice” shows the relative importance of
each part of the data.
Advantages:
 Showing how important each part of the data is compared to the
other parts
 Being easier to understand for people who dislike numerical
values, as there are no numbers
Disadvantages:
 If there are too many “slices” then it is difficult to see the relative
importance of different parts of the data.
 PICTOGRAMS:

• This method uses pictures or symbols to represent data. Every

picture or symbol has a numerical value.
Advantages:
 Data is represented by pictures and not numbers and this helps
people who are less numerate
Disadvantages:
 It is difficult to show exact quantities using pictures.
 LINE GRAPHS:

• This type of graph shows the relationship between two

variables. They are useful to show trends – how data has
changed over time.
Advantages of a line graph:
 They clearly show trends
 Values can be read off from both axes
 Data can be added for future time periods
Disadvantages:
 They can be difficult to draw, and accuracy depends on
choosing appropriate scales for both axes
Using the above presentation methods makes
it easier to analyse, and draw simple
conclusions from, market research data.

Activity:
ANALYSING
MARKET
Exam practice questions: Questions: (1 a, b,
RESEARCH:
c) (2 a, b, c) pg. 163

Activity 11.1 (pg. 162)