Describe the methods used to conduct Market Research
Assignment 2
Describe the methods used to conduct Market Research
Definition of Market Research:
"The gathering and studying of data relating to consumer preferences, purchasing power, etc., esp. prior to introducing a product on the market. The study of influences upon customer and consumer behavior and the analysis of market characteristics and trends"
http://dictionary.reference.com/browse/market+research
Market Research consists of using a range of methods to gather different information of customers' wants and needs. If effective Market Research is carried out this will help produce a successful product/service.
The Key Themes of Market Research
When launching a product a business needs to conduct research on their competitors, customers' needs, and the environmental effects in relation to the product they are going to market. Market Research also includes all aspects of the marketing mix. The results obtained help to produce competitive products.
Customer Research
Organisations use customer research to find out about their current and potential consumers. It is important a business find out what their customers wants are so they can adapt their methods to fit in with potential and current buyers.
Market and market segment sizes - LOOK UP
Market trends - A business needs to look at previous market trends to predict if the products they are selling are going to be successful. Organisations need to forecast customers' needs by looking at similar organisations data (Secondary Research) or conduct research themselves on the business (Primary Research).
Brand Shares - Businesses need to find out about business shares
Changes in demographic factors -
Competition Research
Another factor of Marketing Research is competition. A competitive market has many businesses trying to win the same customers, this is why a business needs to research and compare other businesses products, prices, distribution methods and promotional methods. Competition research also provides information on overall aims and objectives, profit and overall financial situations and likely reactions to competitors plans.
Competition in the market place can be good for customers. Governments encourage competition because it can help improve these factors:
* Price: If there are several retailers, each retailer will lower the price in an attempt to win customers. It is illegal for retailers to agree between themselves to fix a price. They must compete for business.
* Product range: In order to attract and satisfy customers, companies need to produce products that are superior to their competitors.
* Customer service: Retailers that provide customers with a helpful and friendly service will win their loyalty.
Marketing Environment Research
Another key theme of Market Research is considering the marketing environment. Marketing Environmental Research consists of the following:
* Environmental Influences - Environmental influences need to be reviewed when producing a product or service as it may affect both the local and social environment. Organisations need to consider if they have the correct resources to produce the product, if the resources they need in high demand and if there is a shortage of the resource needed?
* Social Influences - Businesses need to consider social influences when conducting marketing research for a ...
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Marketing Environment Research
Another key theme of Market Research is considering the marketing environment. Marketing Environmental Research consists of the following:
* Environmental Influences - Environmental influences need to be reviewed when producing a product or service as it may affect both the local and social environment. Organisations need to consider if they have the correct resources to produce the product, if the resources they need in high demand and if there is a shortage of the resource needed?
* Social Influences - Businesses need to consider social influences when conducting marketing research for a product to be effective. Social influences involves finding out ways in which behavior is influenced by outside factors, and this could be behavior of a whole group or of discrete individuals. Organisations consider social influences to find out what type of marketing will attract them to their product. A social benefit a business can have on the public is that it gives suppliers new custom and it will generate jobs in that local area.
* Technological Influences -
* Political Influences -beyond control
Types of Research
Primary Research
Primary research is information gathered directly from the potential consumers. It involves collecting new data that has not been researched before. Primary research is more reliable as you are getting information from people first hand. For example, Tesco use primary research by giving customers a 'club card'. By issuing customers with a club card they can find out which different categories of customers are buying which products. Other examples of primary research include surveys, questionnaires, interviews, observations and testing.
Advantages
* Reliable
* Control on what the business needs to find out
* Efficient spending on the research
Disadvantages
* Cost - Too much money can be spent on primary research as businesses want to find out the most accurate information and spend money on involving their consumers. In some cases it can be cheaper to look at secondary research.
* Time - Too much time can be spent on market research as business want the most accurate information possible which requires a lot of work. In some cases it is quicker to look at secondary data as the information is already there for companies to look at.
Secondary Research
Secondary Research is information gathered from existing data. This type of research has already been produced by someone else for another purpose. Secondary Research isn't as reliable as Primary Research as the information has come from someone else and the research that has been carried out doesn't always have the exact information business are looking for. Examples of Secondary Research are researching the internet, newspapers, similar company reports, personal documents and published statistics.
Advantages
* Easy to access I.E the internet
* Cheap to obtain
* Helps businesses decide whether launching a product will be successful
* Sometimes past research is the only resource applicable. E.g. Historical Documents
Disadvantages
* In some cases not very accurate
* Not specific to researchers needs
* Time; it can waste time trying to search for marketing information that match business requirements
* The data may not be reliable or accurate
* Having to pay to much money to access the data
Quantitative Research
Quantitative research is factual/numerical information gathered about the market. It is based on numerical data such as the market size, penetration, market share, and market growth rates. Quantitative research can also be based on customer awareness, customer attitudes, customer satisfaction and other statistical research to find out how a market behaves.
Advantages
Disadvantages
Qualitative Research
Qualitative research involves using a range of methods to find out customers views and opinions. It is a type of research that goes more into depth than quantitative research. Examples of qualitative research are in-depth interviews, focus groups and random probability sampling.
In-depth interviews consist of one to one interviews face to face or over the phone. An interviewer will question a potential customer finding out about their personal circumstances and asking for their opinions. This type of research helps business find out in-depth information about potential customers and helps figure out what their wants and needs would be.
Focus groups are groups brought together to find out about what customers think about a businesses products, how they would improve it, what the consumer is looking for and maybe suggest new ideas for the business. Focus groups consist of customers and a marketing leader. The leaders aim is to get as much marketing information from the group as possible.
Advantages
Disadvantages
Explain the methods used by your chosen organization to find out about the behabiour of their customers, competitors and the market environment
Tesco
Behavior of their customers
Tesco's main source of finding out about the behavior of their customers is using the Tesco club card.
Tesco Club Card
For getting a Tesco Clubcard, customers have to register by filling in a form and sending it by post or they can also register online as well as over the phone. This means that Clubcard also acts as a tool for Tesco for collecting useful marketing data related to the buying habits of individual customers. Thus there have been concerns on issues such as invasion of privacy and dissemination of information related to the customers to third parties or other companies for marketing purposes. Tesco however promises that the information is used only by the Tesco group of companies to help them develop better services and products for the customers. "Because they understand their customers, they hope they can serve them better, and so what we've done, right from the beginning, is not look at this program as a marketing sales promotion program, but we've looked at the program as a way of learning about how consumers shop, and what they want from their retailer, and therefore, not just changing the one to one communication with the customer, but changing the physical retail offer" - (Clive Humby, Scoring Points). This however shows that Club card has definitely helped Tesco in developing better understanding of the needs of the customers and at least in that sense has been a very useful tool.
Probably the biggest challenge that retailers face is how they can make the loyalty scheme appealing to their different customer segments. "The most successful examples of innovation and evolution in retail formats are retailers that respond accurately and profitably to previously unsatisfied needs. In an increasing competitive trading environment, the best rewards go to retailers who can attune to the requirements of clearly defined customer segments" - (Peter McGoldrick, Retail Marketing). For a retailer like Tesco the customers can be anyone from a ten year old boy to an 80 years old woman. Thus the loyalty program needs to have elements that can appeal to people of all age groups. Tesco has tried to do this with the Clubcard by offering something for every member of a family. They have introduced different clubs such as Tesco Kids Club, Tesco Baby and Toddler Club, Tesco Healthy living Club, World of Wine Club etc. Membership to these clubs is free to all Clubcard holders and customers can register for the membership online.
In conclusion it can be said that what has made Clubcard work so wonderfully for Tesco is the fact that with this simple single loyalty scheme, Tesco has been able to address to the customer segments of different age groups. Also more then anything else, it is probably the simplicity with which the scheme runs that has made it so successful and acceptable among its customers. "Retailers are looking to expand to the international marketplace, and are making significant investments in Internet customer service. Both large and small store-based and catalogue retailers are using the convenience of the Internet to better serve their customers" - (Michael Levy, Retailing Management). Similarly Tesco's online marketing strategy has also been very simple. Information on products and services of all the groups companies are available on a single website presented in a well integrated way. A customer can jump from the groceries store to the Finance and Insurance division on the same web page unlike most other companies websites which open up a completely new website for the other companies of the same group. Further Tesco has been able to use its loyalty program very well to establish mutually beneficial relationships with its customers. Thus the main reason behind the success of Tesco's relationship marketing strategy and loyalty program has been the way it has managed to establish Club card not as a marketing tool but as a product of relevance and value for the customers.
Competitors
'Tesco has grown to be the UK's most popular supermarket and one of British business' great success stories by fulfilling people's expectations to have safe, nutritious, quality food at affordable prices. We have maintained our popularity by listening to customers and responding to their needs.'
Tesco have become so successful as they have looked at their competitors (such as Sainsbury's, Asda, Marks & Spencer's) aims and objectives and have tried to make their own objectives better. Competitor's aims and objectives are displayed on their websites so they are easy for Tesco to access. Tesco have obviously set higher targets than the rest of their competitors and met then as they are currently so successful.
Tesco have done primary research on their competitors' products, prices, distribution methods and promotional methods. Again Tesco's marketing employee's can look at competitors methods first hand by looking on their websites, going into their stores ect. Tesco have compared their product prices with other competitors also in order to become and sustain the cheapest store to buy from. They always beat competitors pricing or match it.
Tesco again can also use primary quantitative research to look at the profit and overall financial situations of their competitors.
The Marketing Environment
Adele Cotterill Unit 3 - Introduction to Marketing