Unit 3 – Marketing

Chapter 2- Market
Research
CONTENT COVERED

The purposes of market research.

Primary and secondary research.
Sampling techniques.
Market research data.
DEFINITION OF MARKET RESEARCH

? Market research is the process of collecting,

recording and analysing data about the
customers, competitors and the market.
? Purpose of market research.
- Identifying the main features of market such as size,
growth and competitors.
- It helps reduce the risks associated with new
product launches.
- Identify consumer characteristics such as income,
age, social class etc.
- It assists predicting future demand changes.
- It helps explain patterns in sales of existing products
METHODS OF GATHERING INFORMATION

PRIMARY RESEARCH & SECONDARY

RESEARCH.
? Primary research is the collection of
first-hand data that is directly related to
a firm’s needs. Also known as field
research.

? Secondary research is the collection of

data from existing sources. Also known
 PRIMARY RESEARCH
ADVANTAGES
To collect data for the specific purposes
DEFINITION of the business.

Collection of first hand Information gathered will be up-to-date.

data. Also known as To focus research on market reaction to

field research specific changes made by the business,
such as lower prices
or increased advertising.
To gather qualitative data which supports
and helps to explain quantitative data.
To find out about completely new
markets, for example; for innovative
products for which no secondary data
exists.
 PRIMARY RESEARCH
DISADVANTAGES
DEFINITION Designing the research, gathering the
information and then analysing it can
Collection of first hand be time consuming.

data for a business Expensive if business employs

specialist researchers.
needs and own use. Doubts over accuracy and validity –
Also known as field largely because of the need to use
sampling and the risk that the samples
research used may not be fully representative of
the population.
Newly formed businesses have no
customers yet to gain important data
from.
 METHODS OF PRIMARY RESEARCH

? 1. Focus groups – a
group of people who
are asked about their
attitude towards a
product, service,
advertisement or new
style of packaging
ADVANTAGES DISADVANTAGES
Can get in-depth Small groups may not
responses. reflect all your target
 2. CONSUMER SURVEYS

ADVANTAGES
These involve directly Information is taken directly from the
asking consumers or people who are, or will be, the firms
potential consumers consumers.
Questionnaire can help the member
for their opinions and of the public to understand the
preferences. questions.

Questionnaires/intervie
DISADVANTAGES
ws can be by
Slow and costly.
telephone/email or by Some people resent being stopped
post as well as and questioned.
face-to-face.
 METHODS OF PRIMARY RESEARCH

3. Observing and
recording ADVANTAGES
Quick way of collecting data.
Using this approach,
Likely to take less time
market researchers
observe and record
how consumers DISADVANTAGES
behave. e.g. television The results will be distorted if the
person is aware of being observed
viewing patterns,
cameras which monitor records only what actually happens
and not why.
traffic flows, retail audits
which measure which
 METHODS OF PRIMARY RESEARCH
4. Test
ADVANTAGES
marketing
Reduces the risks of a new product launch
This can take
Helps to make improvement before
place after a launch.
decision has
been made to
produce a
DISADVANTAGES
limited quantity
Can be costly if regions selected are huge
of a new
product but Selected regions may not be a good representation
of the target population
before a
full-scale,
SECONDARY RESEARCH
This is the collection of already existing data. It is conducted before primary
research.
SOURCES OF SECONDARY DATA.
? Government publications.
? Local libraries and local government offices.
? Trade organisations.
? Market intelligence reports.
? Newspaper reports and specialist
publications.
? Internal company reports.
? The internet.
SECONDARY RESEARCH METHODS

Government
publications

METHOD
Internet S of Newspapers
Secondary and journals
research

Firms internal
records
SECONDARY RESEARCH

ADVANTAGES DISADVANTAGES

• Often obtained very • May not be updated

cheaply – apart from the frequently and may
purchase of market therefore be out-of-date
intelligence reports
• might not be available
• Obtainable quickly for completely new
without the need to product developments
devise complicated
data-gathering methods
 Sampling
A sample is the group of people taking part in a market research
survey selected to be representative of the overall target market

Need for sampling

In nearly all market research situations it is impossible to seek
evidence from the total ‘population’, i.e. the total potential market
that the firm is aiming at. This is either because that market is so
extensive that contacting everyone in it would be too expensive or
time consuming or it is impossible to identify everyone in that
market.
In all of these cases, in order to undertake primary research, a
sample of the total potential market will need to be chosen.
 Accuracy of primary research

Unfortunately, the reliability of primary data can often

be called into question due to the following reasons;
? Sampling bias – results from a sample may be different
from those that would have been obtained if the entire
population had been questioned
? Questionnaire bias – this may occur when questions
tend to lead respondents towards one particular answer
? Other forms of bias – these might include the
respondent not answering in a very truthful way
 ANALYSIS OF RESEARCH DATA

MEAN (AVERAGE) = Total (sum) / number of items

MODE = Most frequently appearing number

MEDIAN = The middle value of data when organised in ascending or descending order.

RANGE = The difference between the highest and lowest values in a set of data
INTERPRETATIONS OF BAR CHARTS,
PIE CHARTS AND LINE GRAPHS
Pg 305