1.1.2 Market Research

• Key principles of market orientation

  1. Customer focus

  2. Continuous market research

  3. Competitor analysis

  4. Responsiveness to market changes
• A market-oriented approach relies on data-driven insights and market research for improved decision making
• A market-oriented approach allows companies to understand and meet customer needs more effectively
• Market-oriented companies actively seek customer feedback to drive innovation and differentiation
• Market-oriented companies can identify opportunities and threats in a timely manner by closely monitoring the market
• Market orientation

  A business approach that focuses on understanding and meeting the needs and wants of customers in the market
• Disadvantages of a Market-Oriented Approach

  • Potential overreliance on customer feedback
  • Market volatility
  • Resource allocation challenges
  • Potential for homogeneity
  • Balancing short-term and long-term goals
• Market-oriented companies

  • Actively seek customer feedback to drive innovation
  • Develop new and improved products or services based on customer needs and desires
  • Focus on differentiation to increase market share and customer loyalty
• Product-oriented companies tend to have a strong internal focus on research and development, engineering, and manufacturing capabilities
• Product-oriented companies may face challenges if they neglect market dynamics, competition, and customer demands
• Product Orientation

  • Emphasizes the development and improvement of products or services based on company's capabilities and expertise
  • Prioritises product innovation, quality, and features
  • Assumes that a superior product will attract customers and drive business success
• Market-oriented companies

  • Build strong, long-term relationships with customers by prioritising satisfaction and adapting to changing needs
• Product-oriented companies may overlook or underestimate the importance of understanding customer needs and preferences
• A product-oriented approach can be successful in industries with high technological advancement or limited alternatives
• Disadvantages of a Product-Oriented Approach

  • Lack of Customer Focus
  • Market Relevance
  • Limited Customer Input
  • Pricing Challenges
  • Lack of Agility
• Advantages of a Product-Oriented Approach

  • Product Excellence
  • Technical Expertise
  • Product Differentiation
  • Brand Reputation
  • Technology Leadership
• asset led

  companies that are both product-led and market-led
• market research

  research carried out to identify the needs and wants of customers

  reduced the risk when developing a new business idea
• how does market research reduce risk when developing new business ideas?

  • help identify competitors and their USP - help determine your own USP and gain a competitive advantage
  • quantify likely demand for a product
  • get to know customers wants and needs
  • understand how much customers are willing to pay
  • get to know the external environment the business is operating in
• primary data

  research the business has conducted themselves
• secondary data

  gathering data that already exists
• main sources of primary data

  • questionnaires
  • surveys
  • observations
  • customer interviews
  • focus groups
• main sources of secondary data

  • government sources
  • trade publications
  • market reports
  • internet sources
  • newspapers
  • magazines
  • TV + radio
• advantages of primary research:

  • up to date - conducted as required
  • exactly tailored to the needs of the business
  • produces data competitors don't have access to
• disadvantages of primary research:

  • expensive
  • time-consuming to carry out and interpret
• advantages of secondary research:

  • available immediately
  • inexpensive
• disadvantages of secondary research:

  • may be out-of-date
  • difficult to guarantee accuracy and reliability
  • some sources can be expensive
• quantitative research

  focused on numerical data

  questionnaires + surveys
• qualitative research

  focused on opinions and attitudes

  interviews, focus groups, in-depth discussions
• limitations of market research:

  • sample may not be representative
  • bias
  • behaviour of interviewers
  • human behaviour
• advantages of using social media for market research:

  • broad reach
  • ability to target more easily
  • free or low cost
  • personal
  • fast and easy
• market segment

  group of buyers with similar characteristics and buying habits
• how a market can be segmented

  • age
  • gender
  • income
  • social class
  • religion
  • ethnicity
  • location
• why do businesses look at market research

  • better matching of customer needs
  • enhanced profits for businesses
  • better opportunities for growth
  • successful marketing communications
  • gain share of the market segment