market research
marketing orientated: means the business reacts to what customers want. information is gathered about customers needs and wants rather than what the business thinks is right for the customer
product orientated: means the business develops products based on what it is good at making or doing, rather than what the customer wants.
why conduct market research
to see if there is a gap in the market
to inform pricing decisions
to spot trends in the industry
to find out how high costs typically are
to anticipate demand levels
methods of primary research
written questionnaire
telephone survey
focus groups
test marketing
different types of secondary research
government reports - how the economy is performing, average incomes in certain areas etc.
newspaper and magazines may give indications about changing trends and tastes
competitor information - company accounts can be useful to see if competitors are performing well of whether the market size is shrinking, websites will give data on prices and store locations
quantitative research - based on larger samples and is therefore more statistically valid. research is concerned with data and addresses questions such as "how many?"
qualitative research - is based on opinions, attitudes, beliefs and intentions. this kind of research deals with questions such as "why?" / "how?"
sampling - a business cannot ask every question in primary data they must ask the important and relevant questions.
large sample size data tends to be time-consuming but very accurate vice versa for smaller sample size of data
problem with sample. interviewer bias (leading a response) / bias questions
drawbacks of market segmentation
difficulty in identifying the most important segments meaning that customer needs may be difficult to meet
meeting the needs of customers not included in the chosen segment. too much emphasis on market segmentation may lead to a business ignoring other potential customers. this may prevent a business from attracting the mass market
advantages + disadvantages of market research:
advantages:
- can be tailored to meed specific needs of the business
- it is more likely to be up-to-date
- usually cheaper to obtain
- may have been carried out by professionals
disadvantages:
- can be costly and time-consuming to carry out
- entrepreneur may lack the skills to carry out research thoroughly
- may be out of date
- competitors have access to the information, therefore it is unlikely to give them a competitive advantage
website:
most businesses now have websites which automatically generate customer questionnaires. they can be used to target all customers through their home page or a particular focus group. it can be a great way to get free research, however there are many negatives. it could lead to bias results as people don't answer correctly in an aim to get it done quickly or they particularly like the product / service, setting up a data collection can use value man hours, who will respond to questions raised
social media:
can help create a bond between consumers and it can lead to better market research findings. social media can provide a way to gain a fuller understanding or what customers really love / like about a brand or product range and in turn this can help companies gain a full understanding of the market they are serving
databases:
provide businesses with a great range of information.