Market research

Market research is the process of gathering and interpreting data about customers and competitors within a firm’s target market.

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Purpose of market research

• Market research is carried out to: Help firms make marketing decisions Reduce risk
• Data may be gathered for different reasons e.g. to identify current and future needs of consumers, the price customers will pay for a product or the success of a promotional campaign.

Popular theory suggests that there are four reasons why market research might be carried out:

Describe the market – explore trends, establish market share, find out who customers are.

Explain the market – why market share has fallen, why customers prefer competitors products.

Predict changes – what customers will do if price rises, impact of increased competition.
Explore future reactions – customer reaction to new ideas, find target price, establish most appropriate retail outlets.

PRIMARY RESEARCH involves finding out new, first-hand information. This is called primary data.

Methods of Primary Research

• Questionnaires – Survey asking a series of pre-set questions. Gathered via web-based forms, post, telephone or face to face
• Interviews – Focuses on a small number of individuals who are able to give detailed and precise information about their views and opinions

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• Observation – Observing customer behaviour and watching shoppers in action
• Test marketing – Trialling ideas and testing out products with a particular group
• Focus group – Small number of people brought together to focus on a particular product

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Think

• What are the advantages of primary research?
• What are the disadvantages?

SECONDARY RESEARCH involves gathering existing information. This is called secondary data.

Internal data

• Sales Figures – Provides accurate results from previous time periods. Used to establish patterns of behaviour
• Annual Report and Accounts – Provides accurate results from specific years.
• Customer data – Firms gather information about their customers e.g loyalty cards, spending according to time and day

External data

• Government Statistics – Useful data about population change, local/national trends and industries
• Competitors – Accounts and sales brochures
• Trade publications – Specific to industries

Think

• What are the advantages of secondary research?
• What are the disadvantages?

Quantitative market research involves finding numerical data.

Quantitative data is generally collected from large samples and is easy to analyse.

Methods of collecting quantitative data include written and online questionnaires
.

Qualitative research involves finding out opinions, attitudes and feelings
Often more useful than quantitative data but is more difficult to collect and analyse
Methods of collecting qualitative data include focus groups & in-depth interviews