Topic Area 2

• What are the purposes of market research?

  -To reduce risk: prevents incorrect decisions

  -To aid decision making: helps make good, informed decisions

  -To understand the market: identify market gaps; adapting their product

  -Gain customer views/understand their needs and wants: Helps them develop a product to suit their target market

  -To inform product development: what might need changing to become more desirable

  -Understand competitors: Make a product more appealing with a USP
• What is Primary market research?

  Collecting first-hand data that has not been collected before
• What are examples of primary market research?

  -Observations

  -Focus Groups

  -Consumer Trials

  -Test Marketing

  -Questionnaires/surveys
• What are observations + advantages/disadvantages?

  -Watching and recording customers

  -Advantages: Cost little; easy to do; can see what people do rather than what they say they do

  -Disadvantages: Time-consuming; people change their behaviour when being watched; not clear why their behaviour is happening
• What are focus groups + advantages/disadvantages?

  -An interview with a small group of chosen people

  -Advantages: Allows for a deeper insight into peoples preferences; participants can be selected

  -Disadvantages: Some participants may be more dominant; only a small number of participants, limited data
• What are consumer trials + advantages/disadvantages?

  -When a customer is given a sample product to try

  -Advantages: Feedback is directly relevant; can be very reliable and honest; a trial is cheaper than a full launch so it minimises risk

  -Disadvantages: Expensive to give away free products; competitors may copy the product; results are only based on a small sample
• What is test marketing + advantages/disadvantages?

  -Products may be launched in one region for a short period or time to test customer reaction

  -Advantages: Reduces the financial risk of a full launch; feedback is relevant and reliable; can target specific customers/areas

  -Disadvantages: Results may be mislead as they are based on a small sample; competitors may hear about the product and launch a similar product first
• What are questionnaires/surveys + advantages/disadvantages?

  -Questionnaires: Set of questions to find out people's opinions

  -Surveys: Process of collecting data based on questionnaire responses

  -Advantages: Questions are planned to gather relevant, up-to-date data; data can be easy to analyse; can be done in several formats; online surveys are cheap

  -Disadvantages: People may not answer honestly/complete survey; can be expensive; can be time-consuming
• What is Secondary Market research?

  Collecting data that already exists
• What are examples of secondary market research?

  -Internal data

  -Books/newspapers

  -Trade magazines

  -Competitors' data

  -Government publications/statistics

  -Market research reports
• What is internal data + advantages/disadvantages?

  -Historical information that the business already has

  -Advantages: Free to access; relevant to the business; private to the business; can help predict what might happen in the future

  -Disadvantages: May be unreliable/out-of-date; no new knowledge
• What are the advantages + disadvantaged of using books and newspaper for market research?

  Advantages: Access is easy; Newspapers are published regularly

  Disadvantages: Older books and newspapers may be out-of-date; may be biased
• What are trade magazines + advantages/disadvantages?

  -Magazines aimed at professionals of a specific industry

  -Advantages: Information is specific to the industry; relevant

  -Disadvantages: Subscriptions can be expensive
• What is competitors data + advantages/disadvantages?

  -Information about the competitors' business that is publicly avaliable

  -Advantages: data is relevant as it is industry specific; helps with understanding what competitors are doing

  -Disadvantages: Not all information may be released
• What are government publications and statistics + advantages/ disadvantages?

  -Published research, polls and surveys carried out by the government

  -Advantages: High-quality, accurate research; free and easy to access

  -Disadvantages: Might be out of date; information may be biased
• What are market research reports + advantages/disadvantages?

  -Professional market researchers carry out research on specific topics

  -Advantages: Accurate and specialist information

  -Disadvantages: May not be suitable; may be expensive to view
• What are the advantages of primary market research?

  -Results are tailored to the specific needs of the business

  -Information is not shared with competitors

  -Information is up-to-date
• What are the disadvantages of secondary market research?

  -Time-consuming to collect data

  -May distract entrepreneurs from other aspects of their business

  -Can be expensive to carry out
• What is quantitative data?

  -Data measured in numbers and percentages

  -Gathered by asking closed questions
• What are the advantages and disadvantages of quantitative data?

  Advantages: Easy to analyse; can be presented as graphs/charts

  Disadvantages: Does not give specific opinions; does not allow entrepreneur to understand customers' thoughts
• What is qualitative data?

  -Consists of people's opinions and points of view

  -Gathered from open-ended questions
• What are the advantages and disadvantages of qualitative data?

  Advantages: Detailed insight into customers views; valuable detailed information for developing a product

  Disadvantages: Too many different opinions, costly to collect, more time to analyse
• What is market segmentation?

  The process of dividing a market into distinct groups of consumers with similar needs, characteristics, or behaviours.
• What are the 6 types of market segmentation?

  -Age

  -Gender

  -Occupation

  -Income

  -Location

  -Lifestyle
• What are the benefits of market segmentation?

  -Ensure customers needs are met and matched: Businesses can alter the product to suit particular people

  -Increase sales and profit: Customers are more likely to purchase a product that meets their needs; saves money

  -Target the right product at the right customer: Saves money on promotion and makes it more effective

  -Increase customer retention and loyalty: Customers will come back to a product that meets their needs.

  -Increase market share