11.
Market Research
Market research is the process of collecting, analyzing and interpreting information about a product.
Product-oriented business: such firms produce the product first and then tries to find a market for it. Their
concentration is on the product – its quality and price. Firms producing electrical and digital goods such as
refrigerators and computers are examples of product-oriented businesses.
Market-oriented businesses: such firms will conduct market research to see what consumers want and then
produce goods and services to satisfy them. They will set a marketing budget and undertake the different
methods of researching consumer tastes and spending patterns, as well as market conditions. Example,
mobile phone markets.
Why is market research important/needed?
Firms conduct market research in order to ensure that they are producing goods and services that will sell
successfully in the market and generate profits. If they don’t, they could lose a lot of money and fail to
survive.
Market research will answer a lot of the business’s questions prior to product development such as ‘will
customers be willing to buy this product?...
Market research data can be:
- quantitative (numerical-what percentage of teenagers in the city have internet access)
- qualitative (opinion/ judgement- why do more women buy the company’s product than men?)
Market research methods can be categorized into two: primary and secondary market research.
Primary Market Research (Field Research)
The collection of original data. It involves directly collecting information from existing or potential
customers. First-hand data is collected by people who want to use the data (i.e. the firm). Examples of
primary market research methods include questionnaires, focus groups, interviews, observation, and online
surveys and so on.
The process of primary research:
1. Establish the purpose of the market research
2. Decide on the most suitable market research method
3. Decide the size of the sample (customers to conduct research on) and identify the sample
4. Carry out the research
5. Collate and analyse the data
6. Produce a report of the findings
Sample is a subset of a population that is used to represent the entire group as a whole. When
doing research, it is often impractical to survey every member of a particular population because the
number of people is simply too large. Selecting a sample is called sampling. A random
sampling occurs when people are selected at random for research, while quota sampling is when
people are selected on the basis of certain characteristics (age, gender, location etc.) for research.
Methods of primary research
Questionnaires -Detailed information can be -If questions are not clear or
collected are misleading, then unreliable
answers will be given
-Customer’s opinions about
the product can be obtained -Time-consuming and
expensive to carry out
-Online surveys will be research, collate and analyse
cheaper and easier to collate them.
and analyse
-Can be linked to prize draws
and prize draw websites to
encourage customers to fill out
surveys
Interviews -Interviewer can explain -The interviewer could lead
questions that the interviewee and influence the interviewee
doesn’t understand and can to answer a certain way. For
also ask follow-up questions example, by rephrasing a
question such as ‘Would you
-Can gather detailed responses buy this product’ to ‘But, you
and interpret body-language, would definitely buy this
allowing interviewer to come product, right?’ to which the
to accurate conclusions about customer in order to appear
the customer’s opinions. polite would say yes when in
actuality they wouldn’t buy
the product.
-Time-consuming and
expensive to interview
everyone in the sample
Focus groups -They can provide detailed -Time-consuming
information about the
consumer’s opinions -Expensive
-Opinions could be influenced
by others in the group.
Observation -Inexpensive -Only gives basic figures.
Does not tell the firm why
consumer buys them.
Secondary Market Research:
The collection of information that has already been made available by others. Second-hand data
about consumers and markets is collected from already published sources.
Internal sources of information:
Sales department’s sales records, pricing data, customer records, sales reports
Opinions of distributors and public relations officers
Finance department
Customer Services department
External sources of information:
Government statistics: will have information about populations and age structures in the
economy.
Newspapers: articles about economic conditions and forecast spending patterns.
Trade associations: if there is a trade association for a particular industry, it will have
several reports on that industry’s markets.
Market research agencies: these agencies carry out market research on behalf of the
company and provide detailed reports.
Internet: will have a wide range of articles about companies, government statistics,
newspapers and blogs.
Presentation of data from Market Research
Different data handling methods can be used to present data from market research. This will
include:
Tally Tables: used to record data in its original form. The tally table below shows the
number and type of vehicles passing by a shop at different times of the day:
Charts: show the total figures for each piece of data (bar/ column charts) or the proportion
of each piece of data in terms of the total number (pie charts). For example the above tally
table data can be recorded in a bar chart as shown below:
The pie chart above could show a company’s market share in different countries.
Graphs: used to show the relationship between two sets of data. For example how average
temperature varied across the year.
