Internal sources
This is information that has already been collected by your business, and available for other departments to use. As the information has already been collected, it is easy and cheap to use.
External sources
This is when the information is gathered outside the business. There are many sources, but they vary according to what you are researching. This data has not been gathered for any specific purpose, so it is very general.
External sources are:
- Trade associations
- Specialist magazines
- Reports
- Newspapers
- Governments reports
- Media reports
This method of research is very cheap, but as it does have limitations is not always the best.
What is the difference?
Primary data is data that is collected just for that specific purpose. While secondary data is data that was collected for another purpose.
Which is better?
Primary data is better as it is normally more accurate, and as it has been carried out just for your purpose it will have more specific information. Also the information that is collected is of a neutral view point.
Shall I use primary data or Secondary data?
I will use primary data in my project as it will be more accurate, and will be of a neutral view point.
My method of research
The method that I will use is random sampling in the local area. This is so that I can see what a wide range of people think and want in the local area. This is so that I get data that is relevant to me. I will use primary research, in the form of questionnaires. This is because the primary research will be accurate, and more relevant, as it is being carried out for a specific purpose. The reason that I am using a questionnaire is that it allows together very detailed information. There some limitations to my research methods, the major one being that it will take a long amount of time.
Market segmentation
Market segmentation is a method of dividing up the market, into smaller subgroups. An example is that products like drinks may appeal to one group like young people, while another may appeal to older men. This means that the market will break up by age, and gender. This is very important when advertising, as different adverts will appeal to different people in each group.
The most common methods of market segmentation are:
Life style
A married person with kids who has the same wage as a single person will buy different products. This means that the advertising for some products will be aimed at the single person. While some will be aimed at the married person.
Age
People of different age buy different products. This means that an old person will buy different products to a young person.
Gender
Certain products are only brought by males, and some is only brought by females, so the advertising targets that group. Sometimes the products are brought by both groups, but the advertising is just aimed at one.
Region
People in different areas of the country will buy different products. A person in a wet part of the country will buy clothes for wet weather, while in a dry part people wont. This also applies to when a product is exported.
Income
These are created depending on a person's income. The highest in the groups are the managers while the lowest are the unemployed. A product that is to aimed art the highest income group will have a high price, while a product aimed the lowest will have a low price. This also means that the advertising campaign will be different for each group.
Use of product
A product can be used by domestic home users or business. This will influence the way that the product is sold and advertised. If selling to a business then the company may go direct to the business and sell face to face. While if selling to the domestic, market they may just sell over the phone. A product that is aimed at a business user may not be advertised on television, unlike a domestic. Instead brochures may be used. This means that the same product could have to different advertising campaigns.
Social grades
What are social grades?
This is another method of segmenting the market by class. The groups are created on what the head of each home does for a living. The social grades are:
Questionnaire
Questions
Are you in full time employment?
Yes 75%
No 25%
What type of work do you do?
Senior management 20%
Lower management 12%
Supervisor role, administration 30%
Skilled manual 7%
Unskilled manual 23%
Causal labours 8%
Which best describes your yearly income?
Below £5000 4%
£5001-£15000 21%
£15001-£25000 30%
£25001-£35000 10%
£35001-£45000 20%
£45001+ 15%
Do you shop in the local area?
Yes 87%
No 17%
If so, why do you shop in the local area?
Good choice 15%
Lack of choice 67%
Poor parking 15%
Other 3%
Where do you buy your electrical goods from?
Dixons 20%
Currys 34
Johnlewis 6%
Catalogue shop 30%
Internet shop 10%0
Results
The results are shown in pie chart form, as they are the best way to show percentages:
Conclusion
From my research I have found that the social grade of the local area is C, and the average pay is between £"15000-"25000. The majority of these people do not shoe locally, and the main reason is that the local shops do not cater for there needs. This is shows me that I there would be place for me to sell my goods, aimed at social group C. This is because of the people surveyed the majority fit into this group, so it makes sense to primarily aim for them, and then unskilled workers. Also the shop that most of people say they shop at is out side of the local area, but they would shop locally if they had the choice.
My market- The market that I aiming at the senior administrative workers in group C, that earn around £15000-£25000. This is will determine where I place my shop, and pricing. I will aim at this group as they are the group that feel there is no choice for them. I will aim for this market as it is over looked by the other major shops in the area.
As I know now what group that I will primary aim my products at, I must now find an area that is made up mainly of that group. The place where you put your shop is how you get your product to your customers, when looking for a place for my business these facts must be considered:
* Competition
* Parking
* It must be in a area where the income is around £15000+ (for my shop)
From my research I have found that the Corringham town centre meets the criteria as the majority of the inhabits are in group C. Also in the area there is no competition that would affect me and there is easy access to the area.
Evaluation
The place that I have chosen has more advantages then disadvantages. This is because my shop will be in a built up area that will allow people to see any promotions, and they will be drawn to the area by the large supermarket (Somerfields). There is bus stop in Corringham, which makes it easy to get to my shop. Another major advantage is that there are a variety of banks near by such as Lloyds TSB, Woolwich and Barclays that has a cash point meaning it is easy to withdraw cash. There are some disadvantages primarily that there is no dedicated car park however there is a supermarket car park which shoppers can park. The planning restrictions in the local area are not very strict so this will help if I want to make changes to my business. There are very few social costs, but there are also few benefits. The major benefit of me placing shop in my chosen place is that this would bring people into the local area to shop. This would help other local shops.
What is the role of the wholesaler?
The wholesaler is very useful to the local shopkeeper and the large manufacture. The services that are provided by the wholesaler to the small shop are:
They break up the bulk so they make it easier for the small shop to buy goods. They fill in gap between the manufacture and shop, as a small shop would not be able buy large quantities of goods, so instead they can buy them in small amounts form the wholesaler.
They have lots of choice of products as if they were to buy from a manufacture they might to be tied to there line of products. Also as they would have to buy in bulk they would not have space for as wide a range of goods. This may upset some customers as there is no choice.
The wholesaler can deliver the goods in large amounts, as the local shop keeper may not have the vehicle to transport large quantities of goods. Also if the goods must be transported in special conditions (Frozen), then it is more likely that the wholesaler will have the special vehicle, unlike a small shop. This also saves the shop owner time.
A wholesaler will normally give the shop keeper credit, so this free up cash, that can be used for other things. If cash is paid then the wholesaler may give a discount.
A wholesaler may be able it give more information on a product, or new products. This is because they sell the product them self.
How will the wholesaler help me? The wholesaler will be very important in my business, as it will help to breaks up the bulk. The wholesaler being able to deliver will save me time and money, as will not have to invest in special equipment. The wholesaler also may give me credit that will help free up cash for my business.
The product
This is important, as it must have the right features to sell, good looking, and hard wearing. In a small business it is easy for the business to design the product for the customer. The small business can also order special parts for the design. Customer service for a small company is normally better as they can stay open longer, and there after sales support is better. It will be easier for a customer to take a piece of equipment to a local shop, and then send it back to a large company. During the products life it will have many changes to improve it, this is the products life cycle. During a products life cycle the profit and sales of the product are linked, so if sales fall so does profit.
There are many ways of putting the life back into a product:
Changing, or improving the product- This could mean that the company introduces new features, designs, or models.
Altering distribution patterns- sell your products in a more attractive way, e.g. redesign your shops or introduce catalogue or Internet shopping.
Change prices- This can make the product more popular if the price is lowered.
Promotional campaigns- You can revamp a product by adverts, that say but on get one free, or free trails.
Products, brands, and packaging
If your product does not have the benefits that a customer wants there is no point in spending money on adverts.
Product benefits
These are the benefits that your customer wants when buying your product. This means things like on a hot day you buy a cold drink this benefits you as you cool down. Examples of benefits are:
- Convenience
- Accessibility
- After sales support
- Reliability
- Comfort and easy use
- Accountability, so if the product goes wrong then you there is after sales support
- Good staff
- Good designed and looking packing
* Peace of mind, as you know that the company is trust worthy
The more benefits that you can provided the higher the price you could sell your product for, competition is about creating benefits.
