Definitions to learn Market esearch ie the process of gathering, Snalyeng and interpreting Infermation bouts market Key info. Market researchistig business. According OESOMAR, slat business spending on market essere reached Ug illonn 2015, Obviously, businesses "around the word know tis BF great importance oi | ul mere about the market and customer tastes A product-orientated business sone whose main focus of atntyisonthe produce Market research eee ee PU et ee eee + market-orientated businesses (uses of market research information to a re ewig cea Ce ieee a ae Caer Baars een oe ees factors influencing the accuracy of market research data Se eee eee eer ey ee ese eae er td simple conclusions from such data. The role of market research ‘A business needs to find out how many people would want to buy the product it fs planning to offer forsale. If Unee isl very big market forthe procuct. 2 ‘reat deal of money could be wasted developing a product that not many people wil buy. Te could even cause the business to fail altogether. Therefore, itis very important that market research fs cared out accurately. ‘The role of market research is to try to find out answers to these questions: » Would customers be willing to buy my product? >» What price would they be prepared to pay? >» Where would they be most Gkely to buy my product? >» What feature of my product do customers mast lke or distike? >» What type of customer would buy my product? »» What type of promotion would be effective with these types of customers? >» How strong is the competition and who are the main competing businesses? By carrying out market research, a business can identify customer neets in a changing and competitive international environment. Ths is essentil if a business isto remain competitive in the future, Product-orientated and market-orientated businesses Some businesses produce the product first and then try to find a marke: ort. This is known as being product-orientated. This approach is not common today. Product-orientated businesses often produce basic necessities equired for living, such as agricultural tools or Fresh foods, These products may not have a brand ame and are general produts that consumers need to buy. The producer and retailer are manly concerned with the price and quality of the product. Sometines11 MARKET RESEARCH Definitions to learn A market-oriented usiese ane which aries ut market reseacen ted out mater want belrea products developed and produces marketing bets francine rarkting of product or [rosstrangeforsome pected ered ft. Species ow much money ‘Sorotoleto marks frouctor range, otha the Marketing department rows row ruchitmey sped [Definitions to learn imary research the ealection ang callation eontat wth potent ar exsting customers. Also alld eld research) Secondary research ‘eee nfrmation that has ready been callcied and is avolable for ue by thers. (his caled desk ressareh when new technologies are being developed, new products, such as the original ‘Pad, are launched on the market without frst investigating possible demand for them. Consumers may not buy these products until they have been fully tried and tested and until advertising has persuaded them to purchase the products. Businesses whose markets are national or international cannot usualy afford to be product-orientated, It is risky to produce products and hope that they will sell, without first carying out market research to find out iF consumers will want the product. This approach of using market research is called being market-orientated, Tt requires businesses to have a marketing budget. Each business has to identity the wants and desires of customers, both now and inthe future, in order to produce the right goods which wil sell well and make a good proft forthe busiress. Market-orientated businesses are better able to survive in the market and be successful because they are usually more adaptable to changes in customer tastes. They are able to take advantage of new market opportunities which may aise. New products are launched with more confidence when customer needs have been identified before the product is introduced on to the market. Joshua invents 3 new tool or panting seeds tis much easir to use than isting teats: However, i has high manufacturing costs, twice as muchas existing tals Activity 11.1 0 the case study above, 2 [s Joshua's business produet-orientated or markel-rientated? Give reasons or youranswor '» What would you advise Joshua to do before he starts to manufacture the new tol? Explain your answer Market research methods Market research can find out: >» quantitative information, which answers questions about the quantty of something, for example, How many sports shoes were sold in the month of December? or ‘What percentage of children drink sugar-free cola?” > qualitative information, which answers questions where an opinion or Judgement is necessary for example, What do customers like about a particular product?’ or ‘Why da mare women than men buy the company's products?” Both types of information can be gathered asa result of: » primary research, or field research »» secondary research, or desk research, Primary research Primary research, or fed research, is the collection and collation of ariginal data. It involves direct contact with potential or existing customers. ‘Advantages of primary research >» I is upto date and relevant to the business undertaking it. >» Ttis usually planned and carried out by the people who want to use the data it s firsthand>» Ttis most effective when itis used to gather information which will help the business with a specific problem, for example, to test the market to see if a new product would be likely to succeed. >» This not available to other businesses (unless they undertake their own research). Possible limitations » It can be expensive, for example, individually interviewing many peosle >» Tt is not available immediately ~ it takes time to collect. Defntionstolearn] There are various types of primary research methods, including: A questionaieis a aetot | >> questionnaires uesionetobe answered” | 5 gntine surveys | Online surveysrequre the |” foCus groups. target sample answer 2 ris of Questions ver the Interviews note ssking Indinduats eres of tuestion, fen facet The process of primary research To undertake primary research, a business will normally go through a number of stages, as summarised in the diagram below. face or over the phone mae emra ‘Whats wil ans eto tro? Te act awe pa | ‘re ypeot mat each dean, sauna people who are a a Eg oarsasanicncertse i coins | ‘rae here hate tate ho t we hep wi be sary the sere nasa ‘A The stages of primary research Methods of primary research Questionnaires {Questionnaires form the bass of most primary research, Questionnaires may be conducted face-to-face (for example, in the street), by telephone, by post or on the interme. Deciding what question to ak s dificult f you want to be sure of geting accurate rests, Some questions may not be very cleat some questions may lead the respondents to answer in 2 crtain way which may not be what the ell think Closed questions often require a Yes/No answer ut ‘ope questions allow11 MARKET RESEARCH respondents to explain answers in their own wards. The researcher also needs to decide whom to ask. ‘Advantages of questionnaires »» Detailed qualitative information can be gathered about the product or service. » Customers’ opinions about the product or service can be obtained. »» They can be carried out online ~ see section below. »» To encourage people to fil in the questionnaire, vouchers can be afered or participants entered into a ‘prize draw: Disadvantages of questionnaires >» Tf questions are not well thought out, the answers to them will not be very accurate. It may be very misleading forthe business if it is thought that a produc is liked by consumers, when in fact the respondents were only saying they thought the product was quite attractive but they would not actually buy it. »» Carrying out questionnaires can take alot of time and maney. >» Collating and analysing the results is also time-consuming. Online surveys These can be carried out on specialised websites using any intemet-connected device, including mobile phones. Researchers can design their own suvey and post this on ther website, The researcher wil then email people to ak them to 40 to the website and complete the questionnaire Advantages of online surveys >» Fast, with quicker response times than other forms of survey. >> Cheaper than interviews or postal questionnaires. > Easy to complete forthe participant. > ata collected can be quickly presented and analysed using IT tool, Disadvantages of online surveys >» Absence of interviewer to explain open-ended question orto ask fllow-up question to gain more detaiied information. >» Cannot reach potential respondents wha do nat have access tothe internet. > Scope for fraud ~ some people wll just answer an ontne survey to gain any incentives being offereé and not give honest answers, or they complete the survey carelessly. Interviews When interviews are used, the interviewer (the person asking the question) wil have ready-prepared questions for the interviewee (the person answering the questions). ‘Advantages of interviews >» The interviewer is able to explain any questions that the interviewee does nat understand, >» Detailed information can be gathered about what the interviewees like and distike about the product. Disadvantages of interviews >» Whether consciously or unconsciously, the interviewer could lead the interviewee into answering in a certain way, resulting in inaccurate results due to interviewer bias. > Interviews are very time-consuming to catry out and, therefore, they are often an expensive way of gathering information.‘A Focus grupsaliw ensures toexpress their Definitions to learn A samples the group of people who are elected forespona toa market esearch exercise, eh 95 questonatre tandem sample ic when people are seacoast Fandom as source of Information fr market research, samples when | people are slectoa nthe bois of ertin haraterstis [sven ge, gender orincomel 36 2 soures of lormaton fr rare research Study tins ake sure you can sie stable mathod af primary research for particular prosuts and explain why t fe suitable Primary research Focus groups This is where groups of people (focus groups) agree to provi formation through a group discussion with a researcher present. The group migh: discuss a specific product or their reaction to an advertising campaign, for exanple. This helps the business make future marketing decisions. Groups may alsa test new products and then discuss what they think of them, explaining what they Like and what they dislike about them. ‘Advantages of focus groups >» They provide detailed information about consumers’ tastes and preferences. »» Interaction between members of the group can help the business understand the reasons for people's opinions. »» Quicker and cheaper than individual interviews. Disadvantages of focus groups » They can be time-consuming and expensive if conducted by a specialist market research agency. » Discussion could be biased if some people on the panel are influenced by the opinions of others. »» Can be dominated by just a few people so the researcher will need to be experienced to deal with this. The need for sampling ‘When deciding whom to ask to fil in a questionnaire or survey or whom to ‘interview, a sample hos to be selected. This is because it would be too expensive ‘and time-consuming to ty to include all the relevant population in the research There are two common methods of sampling: >» A random sample ~ every member of the population has the same chance ‘of being selected. People are selected at random (often by computer), for ‘example, every hundredth name in a telephone directory. The advancage is that everyone has an even chance of being picked, but not everyone in the population may be a consumer of the particular product being investigated. >» A quota sample - people are selected on the basis of certain characteristics, for example, age, gender or income. Researchers are given a quota. if they are carrying out street interviews, the researchers can choose whom ta interview, providing they ask 2 certain number of people with particular characteristics, For example, they may be required to interview 20 people from the age group 10-25, 30 people from the age group 26-45, and 20 people fram the age group 46-60. The researchers can then find out the views ofthese specific groups. Activity 11.2 following products require some primary research, Decide which ype ofresearch would be the mest appropiate to use for each and why. a. The possible success of anew chocolate bar 1 Whether to introduce new style of watch which uses fashionable bright cours. © Whether o extend an ensting tan service to cover @ new town, 4 The feasibly of opening a new restaurant. «Why the sales ofa sports shoe are fang.11 MARKET RESEARCH Secondary research Secondary research, or desk research, isthe use of information that has already been collected and is available for use by others study tes Woke sure you can select a sutable metho of Secondary resoarch for particular prodvts and Advantages of secondary research »» Often a much cheaper way of gathering information than primary research, as the data collection has already been done by others. »» Ttcan be used to help assess the total size of @ market by finding out the size of the population and its age structure. This type of information could not be ‘obtained by primary research, >» Newspapers may carry vital economic Forecasts if you are tying to assess when recession is coming to an end and your sales are likely to increase again >» Tes usually quicker to obtain secondary data than to undertake primary research. Disadvantages of secondary research >» Data may have been collected several years ago and be out of date. »» Data is available to all businesses ~ not just collected for the sole use of one business. "GA, Data ay not be completely relevant as it was nt collected with the needs of ane business in mind, wvieingeipedstsan Internal sources of secondary data A lot of information may be realy and cheaply avilable from the business onin records. Relevant quantitative information wil be available from che Sales department, which il hold detailed data on which brands of products have been seing well and in which are, The Finance department could give detailed information onthe costs of manufacturing product or providing services. Examples of internal sources of infomation include: havea JO shop. Theseare Sales department record, pricing data, customer records, sales reports Called hotspets and hey > opinions of Distribution and Public Relations personnel ouldmakeagoos eestor © 5, Finance department eee »» Customer Service department. External sources of secondary data This i when information i obtained fom outside the business. External sources are many and varied and tend to depend on the type of product tat i being researched. Information fom extemal sources is inevitably ofa general nature asi bas been Bg! Wy ace esaee paper than teeta hat lg [Link] data can stil be useful, slong asthe Limitations are taken into account. » Government statistics are a detailed source of general information about such things as the population and its age structure, Tis is available in most countries. >» Newspapers may have useful articles, for example, information abost the ‘A Libraries ae usetul for General state of the economy and whether customers are expected to increase Secondary esearch or decrease their spending in the near future.Secondery research >» If there is a trade association forthe industry, it often provides information forthe businesses in that industry. For example, there might be an agricultural association wiich helps farmers who grow particular crops. >» Market research agencies are specialist agencies that carry out research on behalf of companies or anyone who commissions them. They sometimes publish reports oftheir research into particular markets. However, while the reports contain very detailed information about the market, they are expensive to buy. »» Online sources provide an easily accessible source of a very wide range of information, including information on: companies from their own websites: government statistics; opinions about a product or brand on social media; ewspaper websites. In fact any paper-based sources of information can often also be easly and quickly accessed through the internet. However, care must be taken to check the sources of online information as itis not always reliable or up to date. ‘ArThe internet provides sccnsatoarange ot Activity 11.3 {Slrmaton fr rseareh Picea frag esse ct hen erties eoses seri a melwicnar roma! ba may rena Dai ace oy carpet ow proc Sales department's monthly sales gures ‘A-shop's daily inventory figures showing an which days sales are ‘A traffic count to see how many vehicles pass your billboard advertisement na week Ontine questionnaire results ‘A market research agency's report on what customers ike and “ste about your Aooua government population statics {Bata on customer complaints Pep manufactures fay drinks, wantsta start selling @ new érnk in your country. To helpit assess the siz of the market, you have eon asked tid our «the sizeof the otal population brow many pappe there aren the age groups 1-10, 1-20 and 21-80 n your country bow many afferent zy drinks ae soldin your country (how mary camgettors her are) tiers these competitors come from = ar they local companies ar ae the crinks imparted?‘1 MARKET RESEARCH the case study on page 149. What other research would you advise the company to undertake before starting to sell Inyour country? Explain your answer Who carries out market research? Businesses can carry out their own research into diferent aspects ofzhe market ‘or their existing product or the possible market for a new product. Secondary research is often easier and cheaper to carryout, as primary research may be too expensive for the business to undertake ise. ‘The business may decide that it can afford to pay a specialist market research agency wich will cary out whatever research it s asked todo. It wil find out consumers’ spending habits as well a what they think about an individual businesss products and its competitors’ products. However, these agencies are expensive to use Factors influencing the accuracy of market research data The reliability or accuracy ofthe data that has been collected depends largely on >» how carefully the sample was drawn up > the way in which the questions inthe questionnaire were phrased o ensure honest responses » the sample selected - itis unlikely to be truly representative ofthe total population, but it needs tobe as near as is possible. IF a quota sample is used, Father than a random sample, iis easier to get more accurate data » the size of the sample is alsa important. I's not possible to ask everyone ‘na population, whichis why a sample is used. The larger the samate, the more accurate the results are likly to be, but the more expensive wll be the research. If only a small sample is asked, the results are unlikely to be as accurate. Therefore, the researchers need to decide how many people wil give them the accuracy they want and can afford » the wording ofthe questions - trying out questionnaires on a smal group of people before using them on a large sample can help to show if any of the {questions could be misinterpreted. Any such questions can then be rephrased and the revised questionnaite carried out on the main sample >» whe carried out the research ~ secondary research may not be as accurate as first thought because it was intially eared out for some other purpose and 4you would not know how the information was actually gathered » bias ~ articles in nenspapers Sometimes have a bias and important information may be deliberately tet out >» age ofthe information ~ statistics can quickly become aut of date, no longer relating to curent trends in consumers’ buying habits, but reflecting what they used to be spending their maney on, ‘These are just some of the reasons why information collected from all sources, both primary and secondary, should be used with care. It should never be assumed straightaway that information is corect.Factors infuencing the accuracy of market research data steer et Insist Grp ance Custer Ses stngprkira date aeprert “ees Sales ecards engin: “SECONDARY RESEARCH (ese estanct). Specs Meda Maret esearch “Géverment idebures Moos Smee pats pos aoa11 MARKET RESEARCH vantages and disadvantages of diferent ypes of market research ‘Advantages, Disadvantages _Examplesot Wy thelnormation ie | appropriate use might note accurate Primary research Guestionniras L ‘Online surveys Focus groups Tee markets Seconday rovearth”|lnterral sources ‘Esteralsaurees How to design and use a questionnaire Ask yourself the fllowing questions: »» What do I want to find out? Who do T need to ask? (age group, male/female, income level or occupation) > Where wil cary out my questionnaire? suay ies ake sure you can explain hw to carry ut estonnare and wy eath St tne stages important to gain accurate formation, Writing the questions >» When deciding what questions to ask, itis advisable to ask no more than 12, questions. >» Keep the questions short and clear. It isa good idea to keep the arswers simple too, for example, ask for yes/no answers ot provide @ choice from which ‘the respondents have to choose. >» Tf you want to know the age of the interviewee, give a choice of age groups, for example 21-40. »» Avoid open-ended questions unless people's opinions are sought. »» Be careful not to lead the interviewee into an answer that may not be true by asking too direct @ question, »» Think about the order in which you ask the questions. Be logical! Carrying out the questionnaire Before going out and asking the questions, tink bout how you wil ask the auestons and how you ate going to record the rests. You may need to create a ari to put the respondents retes on. »» How many people are you going to ask? >» At what time ofthe day are you going to carry out the questionnaire? Will this affect who will answer the questions? >» Where are you going to carry out the questionnaire? Will this have an influence fon whom you ask?Below are same he results ofa questionnaire that wos carried out to (oak into the feasibiy of opening a fast food restaurant in a city ceive. One hundred people were How to design and use a questionnaire asked at random te answer the questionnaire. The aim tthe questionnaire wast identity the particuler market Segment toe frgeted ney promotional campaign ‘More than onc per wes “Gi” apenas aan Activity 11.6 “Fact lood restaurant Food sal in street) Response, then [Be Sim Etnies ‘ar tok lyse the results inthe case study above and answer these question. Wiich age group would be most kel to eat in fastfood restaurants? How coul this information affect where the business would adverse its restaurant? \Wihy ai the questionnaire contain the qustion Hw often do you eat out Hom wil the reeponees to questions 2nd 3 be uttul othe fast-food restaurant? Suggest wo addtional questions that could have been included in the questionnaire Explain ty the information they provide would be useful tothe business Explain why the questionnaire resus might not be very accurate11 MARKET RESEARCH SaRUEKE Presentation of data from market research \When information hasbeen gathered 2s part of market research, it may be aiffult to make sense of what it means. The raw data wil need to be converted into a form whichis easy to understand. The significant points need o be made clear. For example, after conducting a questionnaire, it may not be clear which answer has te greatest number of yes" responses. ‘The typeof data that has been collected and what it isto be used for wil affect the form of presentation which will be used, Information can be displayed in aiferent forms: > A table or tally chart - usually used to record the data in its original form; however, itis often better to convert the data into a chart or grap. Tine cr Lorry [ven [Bicycle [Porson watking by 1300-1539 _[ eae [| nnn 1600-1659 _| A aa || aA 100-1559 _| We ea HR | a veco-re57 | We ME [a [A [| 1700-17 WFR TT [EN RA | “Zia example ofa tly char »» Achat ~ shows the total Figures for each piere of data nr the nenrartian nf teach piece of data in terms of the total number. For example, fa company sells its product in several countries, a pie chart can show at a glance which countries have the biggest percentage of sales and which have the lowest, one Gees | sein ug Drsao-rese Qiro0-1759 sa Bisorts3s as indi van 7 Baxle 7 Pesan, ean Typeot atic wing ~ ‘A borchar anda pie chartdata irom market research » A graph ~ used to show the relationship between two sets of data, For ‘example, how total cost changed over a number of years. The two variables are ‘total cost’ and ‘time, ‘Adina graph TIGUMPresontation ot data trom market research Tables net Dagan rege Activity 11.7 ou have been asked to carryout some research nt the feasibly of opening 2 new restaurant m your local area, Design yeur own questionnaire to carry auton fiends Brdfor family. Compete the following steps. Design the questionnaire Decide who you are going to ask Decide how many peopl you are going to ask it is a good ide to carryout the ‘questionnaire with riends and then put the resus together so that youhewe 9 {greater numberof repes] Praduce a summary sheet on which to cllate the rosults Collate the results Present the results you have found Enaluate your findings. What does the daa tll you? Should anew restaurant be ‘opened? Iso, what type of restaurant would be succesful? Eraluste your questionnaire. How accurate were your results? Would you redesign the questionnaire you ware carrying out the research again?11 MARKET RESEARCH Aine ea '360-degree cameras ~ how will market research help? ‘Whether you're trying to capture a cityscape from a high viewpoint recreate the experience of an amazing é@ ‘gig ith footage that captures bboth the crowd and the band, cor cover all angles while ‘ming some extreme sport, a 360-degree camera is for you. ‘There are now many businesses producing 360-degroe cameras hoping to take a share ofthis, ‘booming market. A good example is Tesseract Imaging, ich has developed India's frst indigenous 360-degree 3D camera, called Methane. The camera is researched, designed and manufactured in India, ‘A recon! report forecasts the global 360-degree camera market to grow at an annual rate of 35 per cent. It suggests that businesses producing 36)-degree ‘cameras need to do more market research to fd out the following: ¢ Which type of consumers buy these cameras? (¢ What are they most used for? According to the report, one of the main factors driving demand for 380. degree cameras the increasing popularity of virtual realty (VR) headsets. he gaming market is among the fastest markets to incorporate adivanced technologies in ts products. The gaming market is the highest adopter of VR content In 2015, VR games accounted for 5 per cent ofthe {global gaming market, and this is expected to increase to 12 per cent by [Link] share of VR content in the gaming segment is influenced >y the increase in production and adoption of VR headsets. The increated ‘penetration of VR headsets is going to greatly increase the potential market {or 360-degree cameras, Due to rapidly changing consumer trands and fads’ in this market, up-to date consumer research is essential. One ofthe latest trends is the creation ‘of virtual heme parks. These give usexs a real-life experience ofthe virtual World, using a combination ofthe physical environment with 360-degree technology. The Walt Disney Company one ofthe leading providers of ‘outdoor entertainment, launched the Star Ware-Ihemed park, The park ives fans an opportunity 1o experience the simulated world in 360 degrees, Discussion points Why nould secondary market research have been oflite use tothe frst businesses developing 260-degree cameras? fe Do you think that market research would help a business planning to enter the 360-cegree camera market in your country forthe rst time?Presentation of data rom market research Exam-style questions: Short answer and data response 1 TaTis a small business which sells many diferent types of garden tools. I is well known for selling tools of high quality Sales of its products are growing very quickly. Its Managing Director (MD) feels that market research isr’tthe most ‘important factor contributing to the success of the busines. However, the MD does want primary market research to be caried out before developing anew type of lightweight garden tool which is designed to be used by elderly gardeners. a Define ‘primary research. Q b Identify two methods of primary market research, @ Outline two ways of presenting market research data on existing products that TAT could use. 4 Explain two factors which should be taken into account by T&T when taying to ensure the research information is accurate. (6) Do you think market research is necessary before T&T develops the new product? Justify your answer. (6) 2 HH has recently designed @ new app for the iPhone. It will allow people to contra electronic devices in their home when they are not there, Phone users in many different countries will be likely to want to ‘download this app. The Managing Director wants the Marketing ‘department to carry out secondary research rather than primary research before launching this new app. There are very few competitors in the market for this type of app. ‘Define ‘secondary market research, a b Identify two sources of secondary market research data which coud be used by HH. (2 Outkine two advantages to H&H of using secondary market research. [4] 4 Explain two reasons why accurate market research information is important to HBH. 6) € 0 you think the Managing Director i ight to want to only cary out secondary research? Justify your answer. 6) ese? Pe eee ene eee Leese ree] Pa ee ae een ee pore er are erent CTT) eer re rose ee ee ee See ea [NOW - test your understanding with the revision questions in the Student textbook and the Workbook,