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Market Research Main Concepts
Get your head around market research by reading our overview of the different types of research that takes place within different business
The scope of market research
Market research can be used to discover and analyse all aspects of the marketing mix. This will include who the likely customers are (the target market) and their particular needs and wants. If we start with the product, market research can be used to discover what customers want- it can determine the particular functions, size, packaging, colour and name of a product. Market research can be used to help determine the price. At a simple level, secondary market research can discover the prices that competitors charge. Primary market research can ascertain the price that customers are willing to pay for a particular product. Market research can be used to find out where the target market are most likely to buy a particular product (place) and the most effective promotion for reaching them. Market research also includes analysis of the competition to see how best to take some of their market share, and why they have some of yours.
If sales start to fall then market research can be used to analyse possible reasons for this. It may lead to some aspect of the marketing mix being altered to better meet the needs of the customers. It may even lead to a new target market being identified as the market place changes. Without market research, a business may make wrong and expensive changes on the basis of trial and error. They may withdraw a product in the mistaken belief that it has reached the end of the product life cycle.
Primary Market Research
This is also known as field research, as it involves gathering new information through new research. Firstly, the company commissioning the market research needs to determine what information they want to learn. They will then devise the most effective way to find out this information within the restraints of cost and time available. This will usually involve a survey in which respondents are asked a number of questions relating to their preferences. The survey can then be carried out on the public. This can be through face to face interviews, telephone, post or online. Each way has advantages and disadvantages which usually relate to the cost involved, the likely accuracy of the response, the extent to which the respondents represent the target market for the survey and the detail required in the answers. A postal survey is likely to attract only a few responses, and the question will remain of how representative those who do respond are of the target market. Face to face interviews with the respondents picked as being within the target market is likely to be most accurate, but will also be expensive.
Other primary research methods include observation- analysing which parts of a window display are most effective; focus groups in which groups of potential customers have a discussion on the product led by a skilled market researcher and test marketing in which the product is trialled in one area or shop only.
Primary Research Essays
Secondary Market Research
This is also known as desk research, as it relates to gathering information that already exists so theoretically can be undertaken at the desk. This can include analysis of the business’s own previously gathered information, like sales figures, information gathered from loyalty cards and old market research reports. External sources of secondary research are wide and range from the results of an internet search to more detailed publications. There are commercial market research organisations like Mintel and Keynote who regularly publish market reports on different products and industries. These can be purchased and give important information on industry trends and consumer preferences. Trade publications for about every conceivable industry, including Earthmovers, Caterer and Hotelkeeper can also provide industry information. The government provides many statistics through the Office for National Statistics and Social trends that can provide useful information. Competitors may provide useful information through their brochures (e.g. prices and product range) and through their annual report and accounts. Newspapers and other media may also have articles and features of value which only require an online search.
Quantitative and qualitative research
The information gathered by market research can be quantitative or qualitative. Both have their uses but it is important to make a distinction between the two and understand their different uses. Quantitative data is about gathering hard data e.g. how many people used a particular product, how often did they use it, where did they buy it etc. It can usually be expressed with tables, graphs, charts etc. The information is usually gathered by questionnaire and respondents may tick a box to respond to a question e.g. to what extent do you agree with a particular statement with a range of possible responses from totally agree and to totally disagree. This allows the information gathered to be statistically represented and makes analysis of it more straightforward.
Qualitative research is about understanding the feelings and motivations behind customer behaviour. What is it about a particular product that people like, why might they buy it? It may be gathered from focus groups and interviews. The answers will be longer and may not lend themselves to statistical analysis. The responses will also probably come from a smaller sample of people so may be less reliable. It can be however very important for a business to know and understand the motivation behind purchasing their product.