CHAPTER 11: MARKET RESEARCH
MEANING OF MARKET RESEARCH:
It is the process of collecting, analyzing and interpreting information about a product.
Businesses use market research to develop and produce products that consumer wants. Market
research allows us to find out if
1. People would buy the product
2. What consumers like and hate about it
3. The price consumers would pay for it
4. Who would buy the product?
5. What their competitors are offering
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.
MARKET RESEARCH METHODS:
Market research data can be quantitative (numerical-what percentage of teenagers in the city
have internet access) or 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: Can be done face-to-face, through telephone, post or the
internet. Online surveys can also be conducted whereby researchers will email the
sample members to go onto a particular website and fill out a questionnaire posted there.
These questions need to be unbiased, clear and easy to answer to ensure that reliable and
accurate answers are logged in. (The first part of this wikiHow article will give you the
basic idea of how a questionnaire should be prepared.)
Advantages:
Detailed information can be collected
Customer’s opinions about the product can be obtained
Online surveys will be cheaper and easier to collate and analyse
Can be linked to prize draws and prize draw websites to encourage customers to
fill out surveys
Disadvantages:
If questions are not clear or are misleading, then unreliable answers will be
given
Time-consuming and expensive to carry out research, collate and analyse them.
Interviews: interviewer will have ready-made questions for the interviewee.
Advantages:
Interviewer is able to explain questions that the interviewee doesn’t understand
and can also ask follow-up questions
Can gather detailed responses and interpret body-language, allowing
interviewer to come to accurate conclusions about the customer’s opinions.
Disadvantages:
The interviewer could lead and influence the interviewee to answer a certain
way. For example, by rephrasing a question such as ‘Would you buy this
product’ to ‘But, you would definitely buy this product, right?’ to which the
customer in order to appear 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: A group of people representative of the target market (a focus group)
agree to provide information about a particular product or general spending patterns over
time. They can also test the company’s products and give opinions on them.
Advantage:
They can provide detailed information about the consumer’s opinions
Disadvantages:
Time-consuming
Expensive
Opinions could be influenced by others in the group.
Observation: This can take the form of recording (eg: meters fitted to TV screens to see
what channels are being watched), watching (eg: counting how many people enter a
shop), auditing (e.g.: counting of stock in shops to see which products sold well).
Advantage:
Inexpensive
Disadvantage:
Only gives basic figures. Does not tell the firm why consumer buys them.
Secondary Market Research (Desk 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.
Regardless on which type of research a business chooses to use, the accuracy of the
research data depends on:
How carefully the sample was drawn up
How the questions in questionnaires/interviews were written to make
sure honest answers were given
The sample itself and its size. By using quota sampling you might get more
reliable results
The bias – some secondary research will be biased (i.e. articles on newspapers)
which means the information might be unreliable
Age of the data – older data might be inaccurate
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.
