Market Research

Lesson objectives
• Explain why and how organizations carry out market research
• Analyze primary market research methods
• Comment on the secondary market research methods
• Discuss the ethical considerations of market research
• Distinguish between qualitative and quantitative research
• Explain the various sampling methods
• Interpret results from given data
The role of market research
• Market research refers to an activity :
• That aims to discover the opinions, beliefs, and preferences of potential
and existing customers
• Which serves to identify and anticipate the changing needs and wants of
customers
• That collects data and information about competitors and market trends

• When should market research be done?

• Ad hoc (as or when necessary) – the research activity tends to be ‘one-off’,
and typically focused on specific marketing issues, eg prior to launching a
totally new product or studying the perception of customers on a business
which suffered poor publicity
• Continuous – research takes place on a regular/ongoing basis, typically
done by independent organizations or the government, eg research about
cost of living, studying which brands are popular in a given country or
region, ‘top 10’ movies within a given time period, or research in industries
where development is fast-paced
The role of market research
• Why carry this out?
• Trends change quickly, especially in certain industries. Market research
provides businesses with updated information.
• Needs of customers are identified, allowing the business to use an
appropriate marketing mix for them
• Market research allows a business to obtain reactions from a sample group
of consumers prior to a full-scale launch, thus preventing potential
inefficient spending should the product prove to be unappealing
• Gives the business a better understanding of the strategies used by
competitors, enabling it to respond accordingly
• Understanding potential trends may enable the business to introduce
products which will be appealing to consumers, giving it a competitive
advantage
The role of market research
• Therefore, market research will potentially answer these questions:
• Are customers likely to buy the product?
• Which market segments are interested to buy the product?
• How much are customers willing to pay?
• How often are they likely to purchase the product?
• Which brands do customers perceive as being rivals to the product being
marketed?
• What are the most effective methods of promotion?
• Where and how should products be sold?
The role of market research
• Do you agree that market research reduces risks? Why or why not?
• Support your answer by identifying the risks involved and how market
research may or may not mitigate those.
Methods of market research
Primary research Sampling Quantitative
Secondary research methods Qualitative

Primary research is a method of market research that involves gathering new data
firsthand or for the first time.

Secondary research is a method of market research that obtains existing data.

Either way, both methods may obtain two different sets of data:
> Quantitative – obtains quantifiable/numerical data, e.g. population, age, income
level
> Qualitative – studies opinions, perceptions, and behavior of people towards a
certain product or business - all of which are non-measurable
Methods of market research
• Methods of primary research
Surveys (questionnaires) A document that contains a series of questions used to
collect data, may come in different forms: self-completed,
personal, telephone, online, postal
Interviews Typically involves a 1-on-1 discussion between the
interviewer and interviewee; very useful tool in obtaining
qualitative information (and quantitative info, to an extent)
Focus groups Involves forming small discussion groups to gain insights
into the attitudes and behavior of respondents; more useful
in obtaining qualitative information
Observations Involves watching how people behave or respond in different
situations, but will not be able to dig further as to the reasons
for such behavior; may also obtain quantitative information
(e.g. number of cars passing through a certain road)
Methods of market research
• Most primary research efforts require substantial surveys and
interviews; thus the need to:
• Avoid bias – wordings of questions should not distort answers
• Avoid jargon – questions should be phrased in a way that respondents
could comprehend
• Include closed and open-ended questions
• Closed-ended questions (yes/no, multiple choice) – quantitative information
• Open-ended questions (opinions, suggestions) – qualitative information
• Be tried and tested – surveys may be done on a small group of people so
as to enable testing of findings before launching a full-scale research
• Be concise – unnecessary questions should be avoided to minimize the
time needed to complete the survey and to ensure that only relevant
information are obtained
Methods of market research
• Advantages of primary research
Methods of market research

1. Describe mistakes in the questionnaire.

2. Use examples from the questionnaire to distinguish between quantitative and
qualitative primary market research.
Methods of market research
• Sources of secondary research data
• Internal data – company annual records, sales records
• External data – market analysis reports, academic journals, government
publications, media articles, the internet
Methods of market research
• Advantages of secondary research
Ethical considerations of market research

• Market research must be conducted honestly and needs to be

systematic, consistent, and unbiased
• Information obtained should be kept confidential and not used for malicious
purposes

• Unethical market research happens via the 5Ds:

• Damage
• Deceitful
• Deceptive
• Disclosure
• Detachment
Qualitative & quantitative market research

• Market research may also be classified on whether it obtains

numerical or non-numerical data

Qualitative research Commonly used as part of primary research, it

seeks to understand behavior, attitudes, and
perceptions of respondents by obtaining opinions or
“soft answers” (typically through interviews or focus
groups)
Quantitative research Gathers numerical information such as statistics,
age, gender, income level (typically through surveys,
questionnaires, and secondary research – market
share, sales trends, profitability, economic forecasts)
Qualitative & quantitative market research

• Benefits and limitations of qualitative market research

Sampling methods
• Since a given market can be comprised of millions of potential
customers (ie in market research terms, the population), it is
impractical to conduct market research on each individual
• A sample is then selected from the population (aka the respondents) to
obtain statistically valid information
• Sampling – the practice of selecting a small group from the population of a
particular market for primary research purposes

• Key questions to be asked in deciding which type of sampling to use:

• Who needs to be asked / do they represent the target market
• What needs to be asked
• How much will it cost in terms of time and money
Sampling methods
1. Quota sampling
• A sampling method where a certain number of people (the quota) from
different segments, but having similar characteristics, are selected
• Example: out of 1000 total workers, research might be conducted on 50
middle managers and 5 senior managers
• Most commonly used sampling method
+ The sample is fairly quick to obtain
+ Information obtained using this method is far more reliable than being
totally random with respondent selection
- The quota set for each segment and the manner in which respondents are
selected therein may not fairly represent the entire population
- Not everyone in the population will be given an equal chance to respond to
the research, which may give an impression of bias or exclusion
Sampling methods
2. Random sampling
• Happens when the respondents are selected from the population in a
random manner, with no conditions or qualifiers set
• Example: survey may be done on all passengers riding business class or
parents of primary students
+ Very easy and quick to obtain a sample
+ Everyone has an equal chance to respond to a study, minimizing bias or
unrepresentative samples
- It will only be useful if all members of a particular population have similar
characteristics, otherwise results might be skewed because the sample is
unrepresentative
- Sample selection is indiscriminate; the smaller the sample is, the more
inaccurate the results will potentially be
Sampling methods
3. Stratified sampling
• An expanded form of quota sampling
• The method involves:
i. Subdividing a population into segments (aka strata)
ii. Assigning a quota for each relevant segment in proportion to its number in the
population
+ Sample selection is mostly representative of the market, as it involves
getting responses from those with relevant characteristics
+ Results are mostly relevant because of minimal sampling errors
- Very time consuming, as the population needs to be studied to determine
different kinds of strata even before the market research is carried out
Sampling methods
Sampling methods
4. Cluster sampling
• Involves identifying and selecting certain geographical areas or clusters
(regions, villages, provinces) and then randomly interviewing respondents
from the selected cluster
+ Fairly quick method of sampling
- This method may produce biased results, as respondents found in a certain
cluster are likely to have similar opinions or qualities
- While increasing the number of clusters to research would minimize
sampling errors and skewed results, it will be more time consuming
Sampling methods
5. Snowballing
• Involves asking respondents to recommend other respondents to
participate in a primary market research to increase the sample size
• Used when the study was unable to get accurate information pertaining to a
population
+ Fairly quick method of sampling, assuming that respondents are eager to
refer other respondents
- This method may produce biased results, as respondents would mostly
recommend other respondents whose characteristics are fairly similar
Sampling methods
6. Convenience sampling
• Involves selecting respondents on the basis of convenience, ie whoever is
available to respond or is near to the researcher at a certain time/place
• Example: students choosing classmates or relatives in carrying out
research
+ Fairly quick method of sampling, as it easily gets respondents
- Findings are often highly skewed and the sample may not accurately
represent the population
Results from data collection
• Data collected from market research may be presented in a variety of
ways, such as:
• Bar charts – shows frequencies and allows easy comparison
• Pie charts – useful for showing percentages (eg market share)
• Line graphs – indicates time-series data (eg sales for the past 12 months)
• Histograms – useful for showing trends over time
Results from data collection
• Market research is an imperfect science that may not yield absolutely
reliable information
• Common errors encountered in market research:
• Non-sampling errors – human errors in recording, processing, or analyzing
data; may also be due to respondents not giving truthful answers
• Sampling errors are caused by mistakes in the choosing the sample, eg:
• Sample size is too small
• Sample selected does not represent the market
• Inappropriate sampling method used
• Bias in data obtained or from the researcher
Market research & CUEGIS links
• Change
• Substantial and rapid changes to the business environment has fueled the
need for continuous market research
• Without studying markets, businesses would have difficulty in adapting and
would lose competitive advantages

• Culture
• In an effort to implement effective marketing strategies, market research
also entails the study of culture
• Certain questions in research will not appropriate to a certain culture, thus
the need for cultural sensitivity in crafting these

• Ethics
• Purpose in which personal data is being used must be properly disclosed
and agreed upon by respondents
Market research & CUEGIS links
• Globalization
• Market research should be accomplished in consideration of a globalized
environment – businesses are no longer competing with local firms alone
and customers may both come from domestic and overseas locations

• Innovation
• Even social media is being used to obtain information about a market
• Online surveys have made research more flexible and less costly