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Chapter 10 - Market research - Coggle Diagram
Chapter 10 - Market research
Purposes of market research
Market research is the process of gathering information about markets, customers, competitors and the effectiveness of marketing methods
Market research attempts to find out characteristics, wants needs of customers in a market and to build up consumer profiles that describe these
Market research is invaluable in providing information to enable market segmentation and appropriate methods
Involves identifying a gap in the market, forecasting likely demand, finding information about market trends, providing information
Primary and secondary research
Primary research is gathering information for the first time, directly from sources in the market
Secondary research is information that has already been gathered already, either by the business or by other organisations
Primary methods of gathering information
Observation
Researcher watches the behaviour of people via a camera or directly
Information comes from direct behavoir
Time consuming to carry out and analyse results
Surveys through questionnaires or interviews
Questionnaires have closed questions that offer a list of possible answers or open questions that allow the respondent to reply as they feel
Interviews are structures, results are easy to analyse
Enable precisely targeted questions, easy to analyse, unstructured surveys gather in depth answers
Low response rate, difficult to control answers, expensive to train interviewers
Focus groups or panel discussions
Selected small groups take part in a discussion led by a researcher
In depth information gained, group members may raise topics
Group members may be influenced by each other, expensive to set up and analyse information
Test marketing
New products actually sold in a small selected area, before a small launch
Gives information about real buying behaviour
Expensive as all marketing materials need to be produced and marketing carried out
Store cards and data bases
Information tells a business what a consumer is buying and can be linked to other data basses to give a detailed picture of customer trends
Highlights buying trends, enables targeted offers
IT systems are expensive to set up and maintain
Reviews
Many websites offer reviews for products and these provide valuable information about how customers perceive a product
Reviews are cheap and easy to set up and look at
Reviews may not tell the truth, can be written by competitors or by suppliers
Secondary research methods
Government produced data
Trade journals
Internet sites
Business or university libraries
Company reports
Internal customer and production records
Market research agency reports
Sampling methods
2 reasons for not carrying out research on everybody from the group a business is interested in: expense, not every needed for a valid response
Market research usually generates a sample of people from the target group
The larger the sample, the more valid and accurate the results are likely to be
The correct method of sampling must be used so that samples represent the group the business is interested in
Target group is the population and a sample should be chosen to represent the population
Random sampling
When all members of the target population have an equal chance of being selected
Stratified sampling
Attempt to obtain a random sample by dividing the population up into sectors that are distinct (Strata)
Quota sampling
An attempt to obtain a random sample by dividing the population into a number of similar groups
Choosing a sampling method
There is a trade off between the cost, and ease of getting a sample and its accuracy
It becomes more expensive and difficult to obtain a more random sample
Convenience sampling: Researchers choose people in the easiest way themselves (Not random)
Snowball sampling: small number of people are chosen and asked to suggest other people (Not random)
Systematic sampling: more systematic like every tenth house, in a chosen street and area (Middle random)
Multi-stage sampling: A starting selection is made, those who don't respond are substituted by different people (Random)
Limitations
More random methods are expensive, but reflect the population more accurately
Population may change between selecting a method, carrying out research and obtaining final results
Research using a random sample will take longer to design and carry out than a non-random sample
Market research data
Reliability of data collected
Reliability depends on the methods used to collect the information
Results will be less reliable if: questionnaires had difficult questions to understand, interviewers didn't have enough training, respondents didnt give real views, inappropriate analytical methods were used
Analysis of quantitative and qualitive data
Mean = Addition of all numbers / total amount of numbers in the data
Median = middle number of a set of numbers in ascending order
Mode = Most commonly occurring number
Range = Spread of data from lowest to highest
Interpretation of information presented in tables, charts and graphs
Market research information is usually presented as a report
Information may be displayed as tables, pie charts, bar charts, pictograms, scatter graphs, line graphs
It is important to extract key points from any of the displays and use them to analyse the information
Cost effectiveness of market analysis
Market research can cost a lot of money
May go out of date very quickly
Results may be inaccurate, not reflecting what is happening in the market
Gives a lot of information about market trends, customer attitudes and competition
Costs can be saves, products designed to meet needs, marketing methods designed for maximum effect
Planning is key to make sure benefits are realised: set clear objectives, deciding appropriate methods, clear presentation and analysis of results