1.1.2 Market Research

• Product orientation


  An approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer
• Product orientation 


  • The emphasis will be on creating a product first and then finding a market
  • The business has a belief that the product is superior i.e. it will sell itself
• Problem with being too product orientated


  is that over time your business may move further and further away from what the market is looking for, thus increasing the risk of business failure
• A product orientation is an approach often used by inventors who research, test and produce a product well before market research has taken place
• Market orientation


  an approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs 
• Market orientation 

  • Consumers are at the centre of marketing decisions
  • Products will be developed which respond to consumer needs
  • The result of market orientation is that the firm will benefit from increased demand, increased profits, and a valued brand image as its products become more desirable 
• Market orientation aims to develop products to meet needs identified by consumers during the market research process
• Tools of product orientation

  • product research
  • product testing
  • product focus
• Tools of Market orientation

  • Market Research
  • Market Testing
  • Customer Focus
• Market research

  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
  • Anticipate future needs and wants of consumers
  • To understand consumer behaviour 
  • To identify potential consumer demand 
  • To identify how much consumers are prepared to pay
  • To identify competitors and gauge their potential strengths and weaknesses
• Market research data can be quantitative or qualitative

  • Both forms are useful and any data analysis should ideally include a combination of the two
• Primary research

  The process of gathering information directly from consumers in the target market using field research methods such as surveys, interviews, etc

  • This gathers information that is new and does not necessarily exist in any format
• Primary Research Methods

  • Surveys
  • Observation
  • Interviews
  • Test Marketing
  • Focus Groups
• Surveys

  • The most widely used method of gathering primary research is to use sampling by using surveys
  • This is where you would ask a series of questions to a certain number of people (respondents)
  • The results from the ‘sample’ are used to make inferences in which the results of the sample are extrapolated to be true for the wider population
  • A wide range of respondents can be reached using online survey tools such as Survey Monkey
• Observation

  • This involves hiring someone to stand in an appropriate location and study consumer behaviour in a store or perhaps judge the potential consumer traffic at a particular location
  • Researchers may observe the impact of packaging on consumer choice, or the impact that the particular placement of a product in a store may have on consumer choice
• Interviews


  • The questions may be set up in a very similar way to a survey, however, an interviewer asks the questions
  • This method takes longer but does allow the interviewee to ask follow-up questions and gather the information that can easily be missed when conducting surveys
• 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 to collect detailed feedback on all aspects of the marketing mix from the target market
  • Usually limited to a small group of 12-15 people
  • The group typically meets for 90 minutes to 3 hours
• The Advantages of Primary Market Research


  • Information gathering is focused on the needs of the business and will not be available to its rivals
  • The business can get in-depth information from respondents, for example, reasons behind certain behaviour
  • Primary market research is more up-to-date and can be used to ask specific questions and so will be more relevant
•  Disadvantages of Primary Market Research

  • The sample size 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
  • Similarly, respondents 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 and the process can be expensive and time-consuming
• Secondary research


   involves the collection, compilation, and analysis of data that already exists

  • Typical methods include purchasing market reports from specialist companies or accessing government statistical portals which provide useful information 
• The Advantages of Secondary Market Research


  • Information is already available and so is quicker to collect than primary research thereby saving time
  • Information is often free (e.g. government websites and internet sources such as Statista) and is cheaper to collect leading to lower costs compared to primary research 
  • Suitable for a small businessthat lacks a large marketing budget and/or expertise
• Disadvantages of Secondary Market Research


  • Information has been collected for other purposes and so may lack relevance or maynot be factually correct e.g. Wikipedia 
  • Can be expensive to purchase market specific secondary data from specialist companies e.g. MINTEL reports 
  • Information may be out-of-date, especially in dynamic markets
• The use of ICT to Support Market Research


  • Company websites
  • Databases
  • Social networking
• Company websites


  • Websites allow businesses to collect primary data more cheaply
  • e.g. tracking consumer searches and analyzing customer reviews as well as collecting secondary data about rivals
  • e.g. prices and special offers. Pop-upsused on websites can also be an effective way of gathering information
• Databases


  • These can be used to store large amounts of customer information
  • e.g. Tesco loyalty cards. Databases are also effective in collating customer e-mail addresses so that targeted customers can be surveyed later via e-mail
• Social networking


  • Focuses on gathering information about consumers via online social channels such as Twitter and Facebook. It is also useful as a method of running quick polls and surveys or tracking opinions about brands
• Market segmentation


  • The process in which a single market is divided into sub markets or 'segments'
  • Each segment represents a slightly different set of consumer characteristics
  • Firms often segment their markets according to factors such as income, geographical location, religion, gender, or lifestyle
• The Advantages of Market Segmentation


  • Recognises that consumers are not all identical consumer groups do not all share the same tastes and preferences
  • Products and marketing activities can be altered to meet different needs of different groups of consumers and targeted more precisely
  • Less expensive and wasteful than marketing products at wide market segments
  • May increase loyalty if the consumer feels that their needs are being met which can lead to repeat purchases 
• Disadvantages of Market Segmentation


  • Not everyone within a segment will behave in the same way
  • May be difficult to identify a segment and consumers can belong to multiple segments at the same time
  • Segmentation requires more detailed  market research which can prove costly (but beneficial) to the business
  • A segment may be identified but it may be too small and unprofitable to cater for