Market research

• Market research

  The objective collection, compilation and analysis of information about a market
• Effective market research

  • Reduces risk when launching new products or entering new markets
  • Identifies and understands the future needs and wants of customers
  • Understands consumer behaviour
  • Identifies how much consumers are prepared to pay
  • Identifies potential gaps in the market (market niches) which can be exploited to increase sales
  • Identifies competitors and gauge their potential strengths and weaknesses
• Market orientation

  An approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs
• Consumers are at the centre of marketing decisions in market-oriented businesses
• Market-orientated businesses are usually more adaptable to changing customer needs
• Market orientation should lead to a business benefitting from increased demand, increased profits, and a valued brand image as its products are more desirable than those of rivals
• Tools of market orientation

  • Market research
  • Market testing
  • Customer focus
• Market testing

  The process of assessing customer reaction to a product or service before it is launched
• Customer focus

  Putting your customers' needs first and enhancing customer satisfaction and building strong customer relationships
• Primary market research

  The process of gathering information directly from consumers in the target market
• Primary market research methods

  • Surveys
  • Observation
  • Interviews
  • Test marketing
  • Focus groups
• Surveys

  The most widely used tool to gather primary research, where a series of questions are posed to a defined number of people (respondents)
• Observation

  A market researcher studies consumer behaviour during their interaction with a business
• Interviews

  A more formal meeting than a survey between a researcher and a customer, where follow-up questions can be asked to gather detailed information
• Test marketing

  Free samples are provided for a limited period to the target market to gauge their response to the product
• Focus groups

  Free-range discussions led by a marketing specialist that collect detailed feedback on all aspects of the marketing mix from the target market
• A business will often use more than one method of primary research in order to build up a reliable understanding of the market
• Advantages of primary market research

  • Information gathering is focused on the needs of the business and will not be available to its rivals
  • Some primary research methods allow in-depth information to be gathered from respondents, such as reasons for certain behaviours or choices
  • Primary market research is up-to-date and can be used to ask specific questions and so will be more relevant to business decisions
• Disadvantages of primary market research

  • The sample size may be too small and unrepresentative of target customers, leading to unreliable results
  • Bias may mean that researchers guide respondents to answer questions in a particular way
  • Similarly respondents may be influenced by the responses of others or provide inaccurate information
  • A business may need to hire a specialist market research agency to help making the process expensive and time-consuming
• The rise of social media platforms provides businesses with incredible primary research opportunities, allowing for fast, low-cost, and large-scale data collection
• Sampling

  Primary market research is conducted with a small representative sample of the market as a whole
• Sampling methods

  • Quota
  • Random
  • Convenience
• Quota sampling

  Specific proportions of each group of the population are selected to participate in research
• Random sampling

  Every member of the population has an equal chance of being selected
• Convenience sampling

  Uses those who are willing to volunteer and are easiest to access in the study
• The choice of sampling method will depend upon factors like time available, knowledge of the target population, and skills of the researcher(s)
• Secondary research involves the collection, compilation and analysis of data that already exists
• Sources of secondary research

  • Government publications
  • Financial reports
  • Industry associations
  • Market research reports
  • Online databases
  • Media sources
  • Academic sources
• Appropriate sampling method

  Quick and straightforward to organise
• Random sample

  Provides a set of research data that lacks bias and can be interpreted with insight when the business has a good knowledge of the target population
• Convenience sample

  Provides a useful set of data that can be easily interpreted where researchers lack experience or expertise in market research
• A research population refers to the group of people in whom the business has an interest when conducting market research, not the population of the entire country
• Sources of secondary market research

  • Government publications
  • Financial reports
  • Industry associations
  • Market research reports
  • Online databases
  • Media sources
  • Academic institutions
  • Online surveys & polls
• Government publications

  • National governments and trading blocs such as the EU publish reports and statistics on topics such as the economy, demographics, industry trends and consumer behaviour
• Academic institutions

  • Universities and research institutions conduct studies and publish research papers which provide valuable insights and data on specific industries, consumer behaviour and market trends
• Industry associations

  • Trade associations and industry-specific organisations provide detailed information about specific sectors, including market size, growth rates and industry benchmarks
• Specialist market research reports

  • Companies specialising in market research produce and sell in-depth reports on various industries, markets and consumer trends
• Financial reports

  • Public limited companies are required to publish annual reports which can provide valuable information about a company's performance, market position and future plans
• Online databases

  • There are various online databases and research platforms that provide access to a wide range of secondary market research
• Media sources

  • Newspapers, magazines and online publications often contain articles, opinion pieces and investigative reports that can offer insights into market trends, consumer behaviour and industry developments