Market Research
CHAPTER : 11
Definition
MARKET RESEARCH IS THE PROCESS OF GATHERING,
ANALYZING AND INTERPRETING INFORMATION ABOUT A
MARKET
What is Market Research ?
• Market Research helps business identify customer needs in a changing and competitive international environment.
• This is essential if a business is to remain competitive in the future.
• The role of market research is to try to find out answers to these questions:
1. Would customers be willing to buy my product?
2. What price would they be prepared to pay?
3. Where would they be most likely to buy my product?
4. What feature of my product do customers most like or dislike?
5. What type of customer would buy my product?
6. What type of promotion would be effective with these types of customers?
7. How strong is the competition and who are the main competing businesses?
Product-Oriented
• Definition : A product-oriented business is one whose main focus
of activity is on the product itself.
• In Product-Oriented, businesses produce the product first and
then try to find a market for it.
• Businesses often produce basic necessities required for living,
such as agricultural tools or fresh foods.
• They are non-branded and are general products that consumers
need to buy.
• Producer and retailer are concerned with the price and quality of
the product.
• Consumers may not buy these products until they have been fully
tried and tested and advertising has persuaded them to purchase
the products.
Market-Oriented
• Definition
• A market-oriented business is one which carries out market
research to find out consumer wants before a product is developed
and produced.
• Businesses are better able to survive in the market and be
successful because they are usually more adaptable to changes in
customer tastes.
• Able to take advantage of new market opportunities which may
arise.
• New products are launched with more confidence when customer
needs have been identified before the product is introduced on to
the market.
Primary Research
Market
Research
Methods
Secondary Research
Primary Research (Field Research)
Definition
• Primary research is the collection and collation of original data via direct contact with potential or existing customers
• Advantages
1. Up-to-date and relevant information
2. Planned and carried out by the people
3. Most effective when it is used to gather information which will help the business with a specific problem
4. Not available to other businesses
• Disadvantages
1. Expensive in nature
2. Not available immediately
Types of Primary Research
Questionnaire Online Survey
Interviews Focus Groups
Questionnaire
• Definition : A questionnaire is a set of questions to be answered as a means of collecting data for market research
• Can be conducted face-to-face, by telephone, by post or on the internet.
• Deciding what questions to ask is difficult if you want to be sure of getting accurate results.
Advantages Disadvantages
Detailed qualitative information can be gathered about the Non-Accurate answers if questions are not well well
product or service thought-off
Customers’ opinions about the product or service can be Carrying out questionnaires can Expensive and
obtained. Time-Consuming
Can be carried out online Collating and analysing the results is also time-consuming
Online Surveys
• Definition : Online surveys require the target sample to answer series of questions over internet.
• Researchers can design their own survey and post this on their website.
• Researcher will then email people to ask them to go to the website and complete the questionnaire.
Advantages Disadvantages
Fast, with quicker response Cannot reach potential respondents who do not have access to
the internet
Cheaper and Easy to complete Not giving honest answers, or they complete the survey
carelessly
Data collected can be quickly presented and analysed using IT Absence of interviewer to explain open-ended questions
tools
Interviews
• Definition : Interviews involve asking individuals a series of questions, often face-to-face or over the phone
Advantages Disadvantages
Interviewer is able to explain any questions that the interviewee Inaccurate results due to interviewer bias
does not understand
Detailed information can be gathered about likes and dislikes Time-consuming and Expensive way of gathering information
about the product.
Focus Groups
• Definition : A focus group is a group of people who are representative of the target market.
• Agree to provide information through a group discussion with a researcher present.
• Groups may also test new products and then discuss what they think of them, explaining what they like and what they dislike
about them.
Advantages Disadvantages
Detailed information about consumers’ tastes and Time-consuming and expensive
preferences.
Interaction between members of the group can help the Discussion could be biased if people on the panel are
business understand the reasons for people’s opinions. influenced by the opinions of others.
Quicker than interviews Can be dominated by just a few people
Sampling
• Definition : A sample is the group of people who are selected to respond to a market research exercise, such as a
questionnaire
• The key questions to ask on deciding on the type of sampling method to use are:
1. Who Needs To Be Asked
2. What Needs To Be Asked and
3. Whether the costs of the market research can be justified
• The two main methods of sampling are:
1. Random Sampling 2. Quota Sampling
Methods of Sampling
1. Quota sampling
• Quota sampling means a certain number of people (Quota) from different market segments is selected
• Then grouped according to shared characteristics such as age, gender or occupation
2. Random sampling
• Giving everyone in the population an equal chance of being selected for the sample
• Useful when all members of a population have the same or very similar characteristics
Secondary Research (Desk Research)
• Definition : Secondary Research uses information that has already been collected and is available for use by others.
• Advantages
1. Quicker to obtain secondary data
2. Help assess the total size of a market by finding out the size of the population and its age structure
3. Cheaper way of gathering information
• Disadvantages
1. Out-dated Data / Obsolete Data
2. Irrelevant Data as it was not collected with the needs of one business in mind.
Types of Secondary Data
Market
Government
Newspapers Research
Statistics
Agencies
Trade Online
Associations Sources
Factors Influencing the Accuracy of
Market Research Data
Type of questions
How carefully the
were phrased to Type of Sample
sample was Size of the Sample
ensure honest Selected
drawn up
responses
Who carried out Age of the
Bias
the research information