M ARKET R ESEARCH Topic 3.1

W HAT IS MARKET RESEARCH ? The process of gaining information about customers, products, competitors etc through the collection of primary (field) and secondary (desk) data. Primary data is data that is original and has been collected first hand. Secondary data is data that already exists and was collected by someone else. Quantitative research is data about facts that can be statistically analysed and/or expressed as numbers. Qualitative data is data about opinions.

W HY RESEARCH THE MARKET ? To find out what customers want To reduce the risk of the product failing To help firms decide which products to introduce or which products to kill off To help firms understand how to improve products To look at what competitors are doing

S TAGES OF MARKET RESEARCH Designing the research Think about what the company needs to achieve. Think about the best methods of collecting the data to achieve these aims. Does the firm want quantitative data (facts) or qualitative data (opinions) Undertake the research Analyse the data Charts/graphs Reports

R ESEARCHING THE MARKET Secondary Research (Desk Research) Information that has been previously collected and published: Published materials – books, magazines etc. CD-ROMs Internet Government sources – Census etc. Previous research done by firms Problems: May be difficult to find exact data Data may not be accurate Information could be out of date

R ESEARCHING THE MARKET ( CONTINUED ) Primary Research (Field Research) Information collected first hand: Surveys: Face to face Telephone – quicker surveys Post – need to be targeted because response rates are poor Electronic – or on-line One-to-one – in depth interviews Focus groups – a group of people meet and provide information about a product. Product sampling – new samples are offered free of charge e.g. in a supermarket Panels – a few people invited to test or talk about product over a period of time Observing, tasting, testing

R ESEARCHING THE MARKET ( CONTINUED ) Surveys Type of questions Open – no pre set answers given, may be difficult to analyse because of variety of answers Closed – multiple choice answers, may create problem if some answers are accidentally missed off Boolean – only two possible answers e.g. Yes/No Preferences – putting a 1, 2, 3 against choices Scales – rating out of 10, 5, 3 etc. Bad questions Bias – giving a limited choice or phrasing a question so only one answer can be made Weasel words – phrasing the question so badly that it is misunderstood or requires too much

R ESEARCHING THE MARKET ( CONTINUED ) Surveys Using questionnaires – need to think about the following factors which will affect your results. Where are you going to do it? Which day? What time? How many people? The answers depend on what information you need to collect.

R ESEARCHING THE MARKET ( CONTINUED ) Surveys Analysing and evaluating questionnaires: Tables Charts Graphs Statistical analysis - %, mean, mode, median, range etc

R ESEARCHING THE MARKET ( CONTINUED ) Surveys Points for questionnaires: Business decides questions to ask Everyone asked same questions Can repeat to make sure respondent understands Easy to analyse Points against questionnaires: Difficult to express own opinions Brief and impersonal Low return rates for some kinds Expensive and time-consuming Designing questionnaires Simple, clear and easily understood questions Relate to information needed Not too many questions Logical order Record data quickly

R ESEARCHING THE MARKET ( CONTINUED ) Surveys Points for closed questions People more willing to answer Easy to analyse Points against closed questions Answer may not be there No chance to give opinions Points for open questions Can express opinions Opportunity to develop answers Points against open questions Each answer is different Hard to analyse

R ESEARCHING THE MARKET ( CONTINUED ) Surveys Sampling Random – A percentage of the population is chosen, each having an equal chance of selection e.g. by using a phone book Quota – population split into segments and a set number is chosen from each segment which reflects hoe the population is split Targeted – asking only people who fit into a certain category Sample size – large enough to reflect the market 5-10% is good.

R ESEARCHING THE MARKET ( CONTINUED ) Interviews Points for: Detailed information Can explain difficult questions Can demonstrate visually Points against: Expensive Interviewer may need to travel some distance to get correct sample.

R ESEARCHING THE MARKET ( CONTINUED ) Focus groups: Points for: Cheap Response rate good Points against: Other members of group could change opinions Too small a sample? People not prepared to give up so much time Panels: Points for: Detailed Show how opinions change over time Points against: Difficult to keep same panel over time

R ESEARCHING THE MARKET ( CONT ) Product samples Points for: Easy to do Response rate good Points against: Not representative? People reluctant to give negative opinions Primary research as a whole: Points for: Specific Up to date Gives good insight Can be kept private Points against: Expensive Time-consuming to collect and analyse Needs large sample

R ESEARCHING THE MARKET ( CONT ) Secondary research Points for: Cheap Instantly available Points against: Not specific enough Available to other firms too Can be terribly out of date

Q UESTIONS 1. Answer B Comment A incorrect – this information is gathered from qualitative data. B correct – quantitative date refers to ‘quantities’ and thus can be analysed into number form and can be statistically analysed. C incorrect – this is could be the result of either qualitative or quantitative data after it has been collected. D incorrect – quantitative data can come from both primary and secondary sources. 2. Answer C Comment A incorrect – this is part of human resource management. B incorrect – this is part of the production process. C correct – surveying customers would result in gathering their opinions about a product. D incorrect – this is done as part of the billing process when a customer buys a product.

Q UESTIONS 3. Answer D Comment A incorrect – the advertising campaign usually follows the market research process. B incorrect – price cutting is a promotional tool. C incorrect – this is part of the ‘place’ element of the 4Ps. D correct – surveying customers is a market research strategy. 4. Closed question - one that allows respondents to answer a question using a limited range of responses such as ‘yes’, ‘no’, ‘always’, etc. Open question - one that allows a respondent to give an opinion without being tied to a set answer.