BUSINESS STUDIES – CHAPTER 11 – ANSWERS

MARKET RESEARCH
Total marks 40
Define the following:- (each question carries 4 marks)

1. Product oriented business.

Product oriented businesses always concentrate on the product and its quality with
the basic belief that if the product is good and the price matches the value it will be
sold in the market. Such businesses seldom go in for marketing strategies and the
customers stick on to these products just because of its quality. Usually these products
or services come under the category of basic necessities.

2. Market oriented business.

Market oriented businesses will take the effort of finding out the needs and wants of
the market through market research and a suitable product is produced to match the
requirements of the market so that it will be accepted by the customers easily.
Suitable Above-the-line and Below-the-line promotions will be used to increase the
market share. Usually these products come under the category of non-essential goods
or services.

3. Marketing Budget:-

Marketing Budget is a financial plan that fixes the limit for money that can be spent on
the marketing activities of a product or a product range for a specific period of time.
This gives a clear guide line to the marketing department as to how much they can
spend in order to market the product. Accordingly they will formulate suitable
marketing strategies which include strategies related to all the 4 P’s.

4. Market Research:-

Market research is usually done by businesses to find out the needs and wants of the
customers in a market and also to find the strengths & weaknesses of their
competitors so as to identify the opportunities and threats in front of them. A market
research will help the business to identify any market gap if it exists and will also help
in identifying the market segment to which the product belong to. So based on this
market research report a business might produce a product and will also help make
appropriate marketing strategy in order to maximize the sales.

5. Market Gap.

Market Gap refers to a situation where an identifiable group of customers whose

needs or wants are not met in a market. It is always advantages to a business if they
can recognize a market gap as it will help them to produce a product to fulfill the
needs and wants of these customers. The advantage here is that there will be no
existing competitors so the company who has identified the gap can easily establish
themselves in the market and make good profit within a short span of time.

6. Qualitative data.

Qualitative data are usually collected in detailed written format and not in terms of
numbers or figures. Primary qualitative data can be collected from open ended
questionnaires, interviews, etc. Secondary qualitative data can be collected from
newspapers, magazines, diaries, historical books, government records etc. Qualitative
data is always difficult to collate and assimilate for the purpose of research.

7. Quantitative data.

Quantitative data is collected in numerical format. Primary quantitative data can be

collected from closed ended questionnaires, interviews, group observation, etc.
Secondary quantitative data can be collected from census records, government
records, published data of big companies, etc. Quantitative data is always easy to
collate and assimilate for the purpose of research.

8. Primary research or field research:-

When a research uses quantitative or qualitative data obtained from primary sources
(first hand data) either through interviews, questionnaires, observation, etc. we call it
as primary research. Quantitative data will be in the form of numbers and Qualitative
data will be in text form. It is always easy to collate and assimilate quantitative data
rather than qualitative data.
9. Methods of Primary research:_

Questionnaire:-

There are two types of questionnaires – Closed-ended & Open-ended questionnaires.

Closed ended questionnaires will have limited options given by the researcher for the
respondent to choose from. So the data collected will be of quantitative nature, which
will be easy to collate and assimilate.

Whereas the answers for the Open-ended questionnaires will be in text format
(descriptive type) so it is of qualitative type. Hence the data collected will difficult to
collate and assimilate.

Advantages of Questionnaires –

Detailed first-hand information can be collected by the researcher, which will be

reliable. This can be carried out in person or online depending on the budget.
Depending on the nature of the research the questionnaire can be carefully designed
to collect the information either quantitatively or qualitatively which will increase the
reliability and authenticity of the data collected.

Disadvantages of Questionnaires:-

Closed ended questionnaire could sometimes restrict the respondent from expressing
their true response which will distort the outcome of the research. The response given
by the respondents may not be genuine so the outcome will be far from reality. The
questions asked may be too personal so they may feel embarrassed to give a truthful
response. This method is a costly and time consuming method as well as it is difficult
to compile and analyze if the data collected is qualitative in nature.

Interview technique:-

The interviewer is facing the interviewee with a set of prepared questions for which
the interviewee is supposed to provide answer with. The interviewer will be able to
navigate the interview if the interviewee takes it to a different realm. The data
collected will be usually of qualitative type. In order to get undistorted and reliable
data the interviewer should select the right sample and should ask non-threatening
questions.
Advantages of Interview –

The interviewer is able to explain the questions to the interviewee if there is lack of
clarity. There is more flexibility in this method as interviewer can add more questions
or modify existing questions if necessary to collect more accurate and reliable data
from the interviewee. Group interview can be a less time consuming and cheap
method of collecting data.

Disadvantages of Interview –

The interviewer can consciously or unconsciously influence the response of the

interviewee resulting in interviewer bias. Interviews are very time consuming and
costly affair and the data collected usually will be of qualitative nature so difficulty in
collating and assimilating the data. Group interviews on the other hand may not give
the correct response from all the audience as their personal responses may be
influenced by the responses of other group members.

Sample (target audience) for collecting primary data:-

Sampling technique means identifying a group of people having the representative

qualities of a population from whom the researcher could elicit valuable data which
would hold good for the entire population. This is done because it is not practical to
collect data from the entire population as it is a very costly and time consuming affair.

Random sampling – every member of the population has an even chance of getting
selected to the sample group. E.g. every twentieth member of the population is
selected into the sample. The disadvantage is that the selected member may not have
the relevant qualification needed to be part of the sample.

Quota sampling – when a group of people are selected from the population based on
certain characteristics like age, gender, income etc. A quota will be given to the
researchers to collect data. E.g. 100 people from the age group of 15 to 25, 100 people
from the age group of 26 to 35, etc. The data collected will give more accurate insight
for the researchers on the views of each group.

Focus group – This refers to a group of people in the population who agrees to provide
information about a specific product or service over a period of time. E.g. A group of
volunteers who sign up for a third phase vaccine test.
Advantages of focus group – They can provide detailed information about the product
or service for a set period of time.

Disadvantage of focus group – It is a time consuming and expensive process of

collecting data. Sometimes the data can be biased if the opinions and feed backs are
influenced by other group members.

Observation –

Covert & Overt participant observation –

Covert observation is a particular type of participant observation in which the identity

of the researcher, the nature of the research project, and the fact that participants are
being observed are concealed from those who are being studied.

Overt observation can be participant observation and non-participant observation. In

Overt participant observation the observed group is well aware of the study being
conducted and the researcher becomes part of the group under study. Overt non-
participant observation researcher collects the data by not participating in group’s
activities.

Market research data collection through observation:-

Recording – collecting useful data from recordings of CCTV or other recording devices.

Watching – recording observations which will form the data for research.

Audits – Physical verification of the subject under study. E.g. counting the stock to find
our which product sell well.

Advantages of Observation – It is an inexpensive method of collecting data.

Disadvantage of Observation – The information only gives basic figures it does not
provide the reasons for consumer decisions.

Secondary research or Desk research:-

When a research uses quantitative or qualitative data obtained from secondary
sources (second hand data) i.e. through newspapers, magazines, census records,
government records, published data of big companies, etc. we call it as secondary
research. Quantitative data will be in the form of numbers and Qualitative data will be
in text form. It is always easy to collate and assimilate quantitative data rather than
qualitative data.

Secondary Market Research using internal source of information

The data that is collected from the firm’s own records available with different
departments form the internal source of information. E.g. Sales department records
like pricing data, customer records, sales report, etc. Feed backs from distribution and
public relations personnel, finance department, customer service department, etc.

Secondary Market Research using external source of information

The second hand data that is collected from the outside sources like census report,
newspaper, specialized magazines, data from trade associations, market research
agencies, internet, etc.

Secondary research is a cheaper method of gathering information as the data is

already collected by someone else for some other purpose. It is imposable to collect
historical data through primary research as the information can only be collected from
historical records.

The major disadvantages of using secondary data for research is that the researcher
will have no clue regarding the various biases that is involved and also the authenticity
of the data is questionable. More over the timer lag might have made the data
irrelevant or the present purpose for which the data is used may not match with the
original purpose so the findings may lack reliability and validity.

Reliability and Validity of data:-

Reliability is consistency and Validity is accuracy.

E.g. if your scale is off by 5 Kg, it reads your weight every day with an excess of 5 Kg.
The scale is reliable because it consistently reports the same weight every day, but it is
not valid because it adds 5Kgs to your true weight.

10. Researcher bias

This can easily happen in a primary research especially when using qualitative data
because of respondent bias (tendency to accept what the interviewer says), Social
desirability bias, Sponsor bias, confirmation bias (researcher forms hypotheses or
believes and uses respondents information to confirm that hypotheses), cultural bias,
etc. All these bias can lead to distorted conclusions in the research.

11. Data bias

This can happen in primary research or secondary research when using quantitative
data because of statistical bias in the form of selection bias (selecting the wrong group
so that the final study population is not representative of target population), recall
bias (participant unable to recall the previous event or experience accurately),
observer bias (researcher wrongly recording the data either by mistake or because of
preconceived personal believes and experience), funding bias, etc. All these bias can
lead to distorted conclusions in the research.

12. What decides the reliability and validity of Market research data?

How carefully was the sample drawn up depends on how the questions are phrased to
ensure honest response? How likely is the sample a true representation of the total
population? Is the size of the sample good enough to elicit the true response of the
population? Is the question well phrased to get the most appropriate response from
the sample? If secondary data is used is the data reliable and valid for the present
purpose? Is the data biased or not? All these are the factors that decide the reliability
and validity of the market research.

13. Presentation of data for market research:-

 Table or tally chart
 Bar chart
 Pie chart
 Line Graph
14. How can a business conduct primary market research using questionnaires? 

A business can make an appropriate questionnaire either an open ended or closed

ended one, depending on how efficiently they can collect the information from the
target audience without creating confusion and ambiguity. The questionnaire can
either be given directly to the target respondent or through internet like email,
website, etc. The data that is collected through open ended questionnaires will be of
qualitative type which is difficult and time consuming to compile and analyze.
Whereas closed ended questionnaires will provide quantitative data which is easy to
compile and analyze but the research may not through light into the reasons behind
the data.

The questionnaire prepared is then used for a pilot study, which will help understand
the strength and weakness of the questionnaire. The accordingly necessary changes
will be made in the questionnaire to improve the quality of data received.

Then the researcher will have to decide the type and size of the sample. How big the
size of the sample and how representative is the sample compared to the larger
population, will decide the reliability and validity of the data collected.

Then the researcher will have to decide where to carry out the research and when, so
that the data can be collected which can later be collated and analyzed. The result can
then be made into a report.