Chapter 11: Market Research (The reliability or accuracy of the data that…
Chapter 11: Market Research
2 types of market business
One whose main focus of activity is on the product itself.
One which carries out market research to find out consumer wants before a product is developed and produced.
This type of business must have a
: A financial plan for the marketing of a product or product range for some specified period of time.
Why is market research needed?
what feature of my product do people like or dislike
would they be willing to buy my product
what price would they be prepared to pay
where would they be most likely to buy my product
what type of customer would buy my product
what type of promotion would be effective with these types of customers
what is the competition like
(the process of gathering, analysing and interpreting information about a market) can find out:
which answers questions about the quantity of something
, which answers questions where an opinion or judgement is necessary
Both types of information can be gathered as a result of:
primary research / field research ;
The collection and collation of original data via direct contact with potential or existing customers. Also called field research
secondary research / desk research ;
Information that has already been collected and is available for use by others. Also called desk research.
: a set of questions to be answered as a means of collecting data for market research.
Detailed qualitative information can be gathered about the product or service
Customer's opinions about the product or service can be obtained
They can be carried out online, which makes it cheaper and easier to collate/present the result
They can be linked to prize draws and prize draw websites to encourage people to fill in the questionnaire
If questions are not well thought out, the answers to them will not be very accurate
Carrying out questionnaires can take a lot of time and money
Collating and analysing the results is also time-consuming
The interviewer is able to explain any questions that the interviewee does not understand
Detailed information about what the interviewees like and dislike about the product can be gathered
Whether consciously or unconsciously, the interviewer could lead the interviewee into answering in a certain way, resulting in inaccurate results due to interviewer bias
Interviews are very time-consuming to carry out and, therefore, they are often an expensive way of gathering information
: A group of people who are representative of the target market.
They can provide detailed information about consumers' opinions
They can be time-consuming, expensive and biased if some people in the panel are influenced by the opinions of others
can take the form of: recording, watching and audits
It is quite and inexpensive way of gathering data
The information only gives basic figures. It does not provide the business with reasons for consumer decisions
: A group of people who are selected to respond to a market research exercise, such as a questionnaire.
a random sample: when people are selected at random as a source of information for market research
quota sample: when people are selected on the basis of certain characteristics (such as age, gender or income) as a source of information for market research
; a lot of information may be readily and cheaply available from the firm's own records
sales department sales records, pricing data, customer records, sales reports
opinions of distribution and public relations personnel
customer service department
are a detailed source of general information about such things as the population and its age structure
may have useful articles
if there is
for the industry, it often provides information for the businesses in that industry
Market research agencies
are specialist agencies who carry out research on behalf of companies or anyone who commissions them
provides an easily accessible source of a very wide range of information, including info on companies from their own websites, on government statistics, newspapers, etc.
Who carries out market research?
Businesses can carry out their own research
Secondary research is often easier and cheaper to carry out, as primary research may be too expensive for the business to undertake itself
Pay a specialist market research agency who will carry out whatever research it is asked to do
The reliability or accuracy of the data that has been collected depends largely on:
how carefully the sample was drawn up
the way in which the questions in the questionnaire were phrased to ensure honest responses
the sample selected - it is unlikely to be truly representative of the total population, but it needs to be as near as is possible
the size of the sample
well-phrased questions - trying out questionnaires on a small group of people before using them on a large sample can help to see if any of the questions could be misinterpreted
who carried out the research - secondary research may not be as accurate as first thought because it was initially carried out for some other purpose and you would not know how the info was actually gathered
bias - articles in newspapers sometimes have a bias and important information is left out deliberately
age of the information - statistics can quickly become out of date, no longer relating to current trends in consumers' buying habits, but reflecting what they used to be spending their money on
Ways to present data
table or tally chart