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3.3.2 Understanding markets and customers (Sampling (Advantages (Cost +…
3.3.2 Understanding markets and customers
Market research
The process of collecting information about customers and competitors in order to make informed decisions
Product development
Effective promotion
Set performance / sales targets
Determine production levels
Budget allocation
Primary research
Data collected by a company that is specific for their needs and purposes
Surveys and questionnaires
Focus groups
Observations
Experiments
Pros
Collected first hand for the organisations specific needs
Targeted towards specific groups of customers
Up to date
Cons
Time consuming
Expensive
May be biased
Quantitative data
Statistical information focused on identifying patterns of consumer behaviour
Provides numerical information about how consumers behave
Helpful for identifying trends
Collected by questionnaires / observations / experiments
Advantages
Able to summarise and analyse numerically
Enables collection of large amounts of data
Enables patterns and trends to be identified
Disadvantages
May not explain reasons for consumer behaviour
Relies on good quality questions and honest responses from consumers
Qualitative data
Depth information explaining patterns of consumer behaviour
Collecting quality data that explains patterns consumer behaviour
Collected through focus groups and open ended questioning
Advantages
Enables reasons for consumers behaviour to be identified
Follow up questions can be asked
Disadvantages
Usually based on small sample sizes which may not be representative
Can be expensive to collect
Difficulty interpreting and analysing results
Sampling
Conducting market research on a group of customers chosen to be representative of the entire market
Random sample
Chosen by chance
Stratified sample
Represented as a whole by %s
Advantages
Cost + time effective
Qualitive + quantative data
Conclusions drawn quickly and relatively accurately