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Chapter 11 - Business

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5 views

Chapter 11 - Business

Uploaded by

kyishinkhant3737
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Chapter 11 - Market research

Market research - the process of collecting, recording and analysing data about
the customers, competitors and market for a product.

Market research gives a business information about:


Its customers
Its competitors / seller
Its market

Unique selling point - the special feature of a product that sets it apart from
competitors’ products

Product-orientated - the firm decides what to produce and then tries to find
buyers for the product

Market-orientated - products are developed based on consumer demand as


identified by market research
Benefits: - the risk of new products failing is reduced
- products that meet the needs of consumers are likely to last longer in the
market
Benefits or uses of market research

Identify consumer needs. This reduces the risk when developing and
launching new products as the products have been designed and produced
based on the market research info provided by potential consumers
Discover the current and future market size for the product
Provide information about the business’s existing products and markets
Identify the strengths and weakness of competitor products
Decide on how to price and promote the product and how best to distribute
the product to customers
Predict how changes and trends in consumer tastes and fashion may affect
the future demand for products

Primary research and secondary research

Primary research (field research) - the collection of first-hand data for the specific
needs of the firm

Secondary research (desk research) - the collection of data from second hand
sources

Sources of secondary market research data


Methods of primary research

Two types of primary research:


Quantitative research - collection of numerical data that can be analysed
using statistical techniques ( can be presented in tables, graphs or charts)
Qualitative research - collection of information about consumers’ buying
behaviour and their opinions about products
Focus group - A group of consumers is invited to discuss topics such as new
products, packaging, brand names and advertisements.
Benefit - a very good way for a business to find out from typical consumers of what
they think about a product and its marketing
Limitation - it can time-consuming, no numerical data collected

Observation - the behaviour of consumers is secretly observed and recorded by


market researchers.
Benefit - what consumers do is often more accurate than what they say they do
when answering questions asked by interviewers or questionnaire
Limitation - expensive as the need to have trained observers to analyse customer
behaviour, no opportunity to ask customer why they behaved as they did

Test market - a limited quantity of product is produced and sold in a carefully


selected area of the market. Feedback from consumers is used to make changes to
the product or other elements of the marketing mix such as pricing, promotion and
place where the product is sold before launching it to the main market.
Benefit - cost of any problems is limited to a smaller output, identifying and solving
problems in the test market increases the chance of more successful introduction of
the product into the main market
Limitation - takes longer to get the product to its main market, more expensive than
other methods

Consumer surveys - can collect both qualitative and quantitative data.

Several methods used to survey:


Interview - a trained interviewer asks questions to an interviewee and records the
answers
Benefit - can explain immediately for the misunderstandings, can tell if the
interviewee is replying honestly, reduces the risk of collecting inaccurate data
Limitation - expensive if trained interviewers are used, a greater risk of data
collected containing bias

Postal surveys - questionnaires are posted to people’s homes and they are asked
to complete and return them
Benefit - a good way of getting the views of a population spread over a wide
geographical area, much cheaper than interviewing
Limitation - junk mail and thrown away, very low response rate, contain bias

Online surveys - use internet and own websites to carry out surveys
Benefit - cover a very wide geographical area, can be instantly collected and
analysed
Limitation - electronic junk mail, can be biassed
The need for sampling

Sample - a representative sample of the target market selected to take part in


market research

Accuracy of market research data

Inaccurate data can be due to:

● The sample chosen may be too small or not representative of the population
● The business may have chosen the wrong type of method to collect the data
● People may not answer questions truthfully
● Can be biassed
● Language used can be unclear or difficult to understand
● Data may be recorded incorrectly
● Data may be out of date
● Data may have been collected for a different purpose

Presentation and use of market research results

Qualitative research, that obtained from a focus panel or test market, is


usually presented in the form of written reports
Quantitative research consists of data with lots of numbers. This include
tables, charts, graphs and pictograms

Tables
Advantages: - a large amount of data can be grouped and presented more clearly
- easy to extract numerical data
Disadvantages: - lack of visual impact
- too much data can make it difficult to understand

Bar charts
Advantages: - can easily see the importance of each piece of data
- can read numerical values from the axis
Disadvantages: - difficult to compare the different parts and chart loses visual
impact
Pie charts
Advantages: - show how important each part of the data is
- easier to understand for people who dislike numerical values
Disadvantages: - if there are too many slice then it’s difficult to see the relative
importance of different parts of the data

Pictograms
Advantages: - data is represented by pictures and not numbers which helps people
who are less numerate
Disadvantages: - difficult to show exact quantities using pictures

Line graphs
Advantages: - clearly show trends
- values can be read off from both axes
- data can be added for future time periods
Disadvantage: - can be difficult to draw and accuracy depends on choosing
appropriate scales for both axes

Analysing market research


It is easier to analyse, and draw simple conclusions from market research data.

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