Market research

• The purpose of market research

  • Market research is the objective collection, compilation and analysis of information about a market
  • Effective market research will help the business 
  • To reduce risk when launching new products or entering new markets
  • To identify and understand the future needs and wants of customers
  • To identify potential gaps (market niche's) in the market which can be exploited to increase the sales volume
  • To identify competitors and gauge their potential strengths and weaknesses
  • Market research helps the business to make informed decisions about the most effective way to use their valuable resources
  • Market research enables the firm to develop the correct marketing mix 
  • On-going market research helps businesses to keep changing their marketing strategy in line with customers changing needs and preferences
• Methods of market research

  • The process of market research is broadly classified into two categories - primary and secondary research
  • Primary research is the process of gathering information directly from consumers in the target market using field research methods such as surveys, interviews etc
  • This research gathers information which is new and does not already exist in any format
  • The most commonly used methods of primary market research include the use of surveys, interviews based on questionnaires, observation, focus groups and test marketing 
  • Secondary research involves the collection, compilation and analysis of data which already exists
  • Typical methods include:
  • Using the internet
  • Purchasing market reports from specialist companies such as Mintel
  • Accessing government research which provides useful information e.g The Office for National Statistics (ONS)
• The use of data in market research

  • Market research data can be quantitative or qualitative
  • Quantitative data is based on numbers and could include financial reports (e.g. sales, costs), market data (e.g. markets share) or summaries of data gained from primary research (e.g. on a scale of 1-10 rate our customer service)
  • Qualitative data gathers descriptions or explanations based on conversations, discussions, impressions, and emotional feelings and is usually gathered through primary research
• Limitations of qualitative data

  • The sample size used to gather data may be too small and unrepresentative of all of the customers, leading to unreliable results
  • Bias may mean that researchers can guide respondents to answer questions in a particular way
  • Respondents in focus groups may be influenced by the responses of others, or not provide accurate information
  • A business may need to hire a specialist market research agency to help gather primary data and the process can be expensive and time-consuming
• Limitations of quantitative data

  • Information has been collected for other purposes and so may lack relevance or may not be factually correct
  • Can be expensive to purchase market specific secondary data from specialist companies such as MINTEL
  • Numerical data may be out-of-date, especially in dynamic markets
  • Data analysis and interpretation is a skill and individuals within the business may draw incorrect conclusions which are then used to guide business strategy
  • Looking at a small amount of data and then extrapolating the results can provide wrong assumptions from which strategic decisions are made
  • Numerical data may provide insights, but does not provide the reasons for the insights e.g. data may reveal sales volumes are falling, but not the reason for the decline
• What is one method for collecting market research data mentioned?

  Using social media
• Why has primary research traditionally been difficult for businesses?

  It has been relatively difficult and expensive
• What has the rise of social media platforms provided businesses?

  Incredible market research opportunities
• How does the speed of communication on social media benefit businesses?

  It allows for almost instantaneous feedback
• How can businesses gather responses quickly using social media?

  By using online polls
• What is a benefit of online polls in market research?

  Thousands of responses can be received quickly
• What is the cost implication of gathering information through social media?

  The cost can be very low
• How long does it take to set up online polls?

  A few minutes
• What does software do after setting up online polls?

  Automatically gathers and analyzes results
• How does social media help businesses with customer relationships?

  It generates an interactive relationship
• What is a benefit of strengthening brand loyalty through social media?

  It enhances customer retention
• How can customers use social media to influence products?

  By providing quick feedback or innovative ideas
• How can customer feedback on social media assist firms?

  It may help develop extension strategies
• What are the key social media platforms mentioned for market research?

  • Facebook
  • Twitter
  • Instagram
  • TikTok
• What are the advantages of using social media for market research?

  • Low cost of data collection
  • Speed of communication
  • Interactive customer relationships
  • Quick feedback and innovative ideas