Market Research

Today you will know what market research is.

You will understand the 2 types of research and their methods and the 2 types of data.

You will be able to identify the benefits and drawbacks of each type of research and

their methods.

Researching The Market

When setting up in business the starting point is to discover the marketing fundamentals:

How big is the market you are thinking about (market size) what is the future potential and

what are the market shares of the existing companies and brands.

To answer these questions research must be conducted.

The starting point for new businesses is secondary research.

Market Research

Market research involves gathering and analysing data from the marketplace (i.e.

from consumers and potential consumers) in order to provide goods and services that

meet their needs.

There are 2 types of research:

Primary & Secondary Research

Secondary Research

Sometimes called “desk research”Involves using information that has already been collectedIt can be obtained from a number of sources:

Government statisticsMarket Research Companies, e.g. Gallop or MintelNewspapersThe InternetTrade Press

Secondary Research

The InternetGoogle is used to provide a starting point for the topic. This

can provide invaluable information though online providers of market research information will want to charge for the

service.

Trade PressEvery market is served by one or more magazines written for people who work within that trade. i.e. Grocer: Fast Moving

Consumer Goods market.

Government Produced DataThe government funded National Statistics produces valuable

reports, such as the Annual Abstract of Statistics and Economic Trends. These provide data on population trends

and forecasts. i.e. someone starting a hair and beauty salon might wish to find out how many 16-20 year old women there

will be in 2012.

Advantages & Disadvantages ofSecondary Research

3)

2)

1)

Information may not be relevant

Can find out what competitors are

doing

Data can be difficult make sense of

It is cheap

Information may be out of date

Information is already available

DisadvantagesAdvantages

Primary ResearchAlso known as “field research”

Information that is newly created. It is the process of gathering information directly from people within your target

market.Primary Research can also be collected by research firms, ie

Gallup, Mori etc, or by the firm itself

There are a number of methods:

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P os ta l F ace-to -F ace

Q u es tion n a ires C on su m erP an e ls

Te lep h on e O p enE n d ed

G rou pIn te rview s

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S u rveys

E lec tron icie E P O S

"W atch in g "

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F ie ld R esearch

Advantages & Disadvantages of Primary Research

3)

2)

1)

Difficult to obtainCompetitors will not have the information

Takes longer to obtainInformation is up to date

It is expensiveObtain the information you

want

DisadvantagesAdvantages

Primary Research & Methods…

This is research designed to gather primary data, that is, information which is obtained specifically for the study in

question. It can be gathered in three main ways - observation, questionnaires and experimentation.

Observation This involves watching people and monitoring and recording their

behaviour (e.g. television viewing patterns, cameras which monitor traffic flows, retail audits which measure which brands of product

consumers are purchasing).

Experimentation This involves the introduction of a variety of marketing activities into the marketplace and then measuring the effect of each of these on consumers. For example, test marketing, where a new product is launched in a small, geographical area and then the response of consumers towards it will dictate whether or not the product is

launched nationally.

Primary Research & Methods…

Questionnaires Questionnaires are a means of direct contact with consumers

and can take a variety of forms. Personal questionnaires (such as door-to-door interviewing), postal questionnaires, telephone questionnaires and group

questionnaires (such as asking for the attitudes of a group of consumers towards a new product).

Questionnaires can be a very expensive and time-consuming process and it can be very difficult to eliminate the element of

bias in the way that they are carried out. It is important that every respondent must be asked the same questions in the same order, with no help or emphasis being

placed on certain questions / responses.

Qualitative Research

Qualitative research attempts to gain an insight into the motivations that drive a consumer to behave in a

particular way. It is usually conducted through group discussions (often called focus groups) in order to discover the rationale

behind consumers’ purchases. The group discussion is often chaired by a psychologist in a relaxed manner, which should encourage the consumers

to discuss their shopping habits and pre-conceptions concerning certain products and brands.

Qualitative research can also be conducted through in depth interviews. These are usually informal, in-depth

interviews between a psychologist and a consumer. They have the same function as a focus group, but they avoid

the risk that group opinion will be swayed by one influential person.

Quantitative Research

Quantitative research involves carrying out market research by taking a sample of the population and asking them pre-set questions via a questionnaire (normally 200+ respondents) in order to discover

the likely levels of demand at different price levels, estimated sales of a new product, and the ‘typical’

purchaser of the company’s products. The data is numerical and can be analysed

graphically and statistically.

There are several types of sample that can be used to gather quantitative data:

Random sampling – this gives each member of the public an equal chance of being used in the sample. The respondents are often chosen by computer from a telephone directory of from the Electoral Register.

Quota sampling – this method involves the consumers being grouped into segments which share certain characteristics (e.g. age or gender). The interviewers are then told to choose a certain number of respondents from each segment. However, the numbers of people interviewed in each segment are not usually representative of the population as a whole. However it is a cheap and effective way of sampling and is the most commonly used in market research.

Cluster sampling – this normally involves the consumers being grouped into geographical groups (or ‘clusters’) and then a random sample being carried out within each location.

Stratified sampling – the consumers are grouped into segments again (or ‘strata’) based upon some previous knowledge of how the population is divided up. The number of people chosen to be interviewed from each ‘strata’ is proportional to the population as a whole.

Sampling Methods…

Questionnaire Design…

Quantitative research is expensive and its results may influence major decisions such as whether to launch a new product.

Therefore a mistake in writing the questionnaire may prove very costly.

The Key features of a good Questionnaire

Clear Defined Research Objectives: What exactly do you need to find out?

Ensure that questions do not point towards a particular answer.

Ensure that the meaning of each question is clear, perhaps testing / piloting the questions before putting them into field work.

Manly use ‘closed’ questions. (Ones with limited responses, i.e. tick boxes, these allow for quantifiable results.

It is useful to have a few open questions, to allow respondents to write a sentence or two, providing more in-depth understanding.

Ensure that the questionnaire finishes by asking for full demographic and usership details. (i.e. the respondents age, sex and occupation – and therefore social class and buying habits.) This allows more detailed analysis of sub-groups within the sample.

Tasks: Revision Questions…

Page 150 of the text book.

Complete A Revision Questions1, 2, 3, 4, 5, & 6 (22 marks / 25 mins)

Complete B Revision Exercises

B1: Market Research Assignment.Read the text and then complete questions

1, 2 & 3 (30 marks / 30 mins)

B2: Case StudyRead the text and then complete questions

1, 2 & 3 (20 marks / 30 mins)

2. Explain what sampling method you would use and why. (6 marks)

Start with a definition of what sampling is. (AO:1)

Then identify one method of sampling. (AO:1)Then explain why it might be suitable for Hampton. Explain the benefits of this sampling method and then highlight the drawbacks of this method for Hampton. (A0:2 & AO:3)

Then identify another method of sampling. (AO:1)Then explain why it might be suitable for Hampton. Explain the benefits of this sampling method and then highlight the drawbacks of this method for Hampton. (A0:2 & AO:3)

AO:1 /1 AO:2 /2 AO:3 /3

2. Explain what sampling method you would use and why. (6 marks)

Start with a definition of what sampling is. (AO:1)

Then identify one method of sampling. (AO:1)Then explain why it might be suitable for Hampton. Explain the benefits of this sampling method and then highlight the drawbacks of this method for Hampton. (A0:2 & AO:3)

Then identify another method of sampling. (AO:1)Then explain why it might be suitable for Hampton. Explain the benefits of this sampling method and then highlight the drawbacks of this method for Hampton. (A0:2 & AO:3)

AO:1 /1 AO:2 /2 AO:3 /3

3. b) Analyse two ways in which qualitative research might help the marketing director. (6 marks)

Start with a definition of what qualitative is and the methods used to gain this research.. (AO:1)

Then state 2 benefits of qualitative research and how it might impact / help Hampton. Explain in full

these benefits. (A0:2 & AO:3)

Then state the drawbacks of qualitative research and how it might impact Hampton. Explain in full

these drawbacks. (A0:2 & AO:3)

AO:1 /2 AO:2 /2 AO:3 /2