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Booklet 2 - Market Research - Coggle Diagram
Booklet 2 - Market Research
Orientation
- The firm can either use product or market orientation when designing a product for consumers.
Market orientation
- the firm will identify customer needs and then create a product that fits these needs. This approach makes it much easier for a product to sell as they know consumers will purchase it.
Product orientation
- The firm focuses on the production process and the product itself first. Then they will advertise the product to try and gain public interest. An example of this is medicines that rely on research rather than customer needs.
Evaluation
- It could be argued that the market orientated approach is the best because they will have customers who want to product and are able to adapt to market changes but on the other hand being product orientated products create a need that consumers didn't know they needed such as mobile phones.
Market Research
- The collection of information from customers and rivals to help a firm assess the needs and wants of customers to develop a product that satisfies. There are two types of research.
Market research
can be used
to identify customer needs, find out the likely demand of a product and to provide an insight to consumer behaviour.
Primary Research
- collection of first hand information for a specific purpose.
Advantages
- It is up to date and relevant to the firms needs and so the information collected will be useful.
Disadvantages
- It is costly and time consuming. Given that data cannot be collected on everyone's needs the data could be unrepresentative and not be accurate.
Examples of primary:
questionnaires
postal surveys
telephone surveys
internet surveys
focus groups
observation
Secondary research
- collection of second-hand information collected for another purpose.
Secondary research can involve using internal or external data.
Internal data
is information collected from existing business documents such as sales figures.
External data
is from sources outside of the business usually collected by other organisations for their own purpose.
Advantages
- It is relatively easy and cheap to collect as the information is already available.
Disadvantages
- Information may be outdated and therefore misleading. Since anyone can access the info it wont give the firm an advantage over other firms. It may also not even be relevant to the business.
Examples of secondary:
government publications
newspaper / magazine
internet
Research can either be quantitative or qualitative.
Quantitative
data is data which can be measured such as figures and statistics.
Qualitative
data is data that is based on opinions and attitudes to give detailed information.
The
limitations
to market research is that it can unreliable and cause the firm to make a product consumers don't want. This can be due to the research being bias or down to human behaviour.
Market segmentation
- markets can be divided up into different sectors or segments. Each segment will have similar needs so firms can target their products at particular segments. You can segment by
geographic, demographic, psychographic and behavioural.
Demographic
segments can be age, gender, income, social class, ethnicity and religion.
Psychographic
segments can be attitudes, opinions and lifestyles.
Geographic
relates to where a customer lives within an area.
Behavioural
segments are how customers relate to a product. Usage rate and product loyalty.
Benefits
- Segmentation is a way of differentiating a product from competitors, identifies ways of advertising a product and spend less wasteful resources on products consumers don't want.
Drawbacks
- Segmentation is an approximation of behaviour, not everyone acts the same way. It can be difficult to reach the chosen market and satisfy all.
Market mapping
- a technique used by firms to identify whether these is a gap in the market where a product can be created to satisfy customer needs. The map can base products on
high quality vs low quality
,
high price vs low price
and
necessity vs luxury
.
The map can show the firm where there is a gap in the market in which a product can be created. The
limitations
of these maps are they can only plot 2 attributes at one time and the info needed to plot the map can be expensive by having to use primary research.
A firm may try to reposition their products when markets change. This usually involves changing their target audience.
Competitive advantage
- an advantage that enables a firm to perform better than its rivals in the market.
Ways to
gain a comp adv
are:
promotion
customer service
ethics
delivery times
economies of scale
product design
Firms may
differentiate
their products to appear different to rivals. This can be done by brand name, packaging, USP and the quality. This can enable them to charge higher prices, gain loyal customers and t o gain market share.
Adding value
are extra features of a product that give them an edge over rivals to convince customers to buy. These can be by customer service, packaging and bundling.