Business Studies

September 21, 1998

1. Market Research is the collection, collation and analysis of data relating to the marketing and consumption of goods and services. A firm may gather information for example about the likely consumers of a new product and use the data to help in their decision making process.

2. Market Research may help firms because it allows them to identify some of the followings needs connected to a product:

• Whether or not consumers would want such a product
• What the consumers buy at present
• The price that consumers would be willing to pay for the product
• What style, shape, colour or form it should have

3. Market Research is used for four reasons, these can be simplified into Descriptive, Explanatory, Exploratory and Predictive (DEEP). The descriptive and predictive methods are explained below:

A business may wish to know what is happening in it’s market. For example, a chocolate manufacturer may wish to find trends in sales of various chocolates over a certain period, or maybe to find the types of customers who are buying different chocolates.

This method allows a business to hopefully identify what is likely to happen to a particular market in the future. For example, a car manufacturer would like to discover the changes in the car market likely to happen in the next five years. This would therefore put it in the position of being able to hopefully adapt their current cars to suit this new future market

4. The other two reasons for market research are written below:

A business may want to identify and explain certain sales trends throughout certain parts of a country. It would also like to explain certain features of the company’s marketing. For example, a chocolate manufacturer would like to research as to why there has been a decline in sales for a particular chocolate product.

This is how a business investigates into new possibilities within a market. For example, a drinks manufacturer could test market a new drink in a small geographical area before distributing the product nationally.

5. By definition, the difference between primary and secondary research is below:

This is information which does not already exist. In other words, it has to be collected by the researcher. Primary or Field research can either be carried out by a firm itself or by a market research agency. The main advantage to primary research is that the company that collects the information is the only company to have access to the information. It can therefore be used to gain marketing advantages over rival firms

This is information which already exists in some form. It may be existing business documents or other publications. Business documents that a firm may use for market research include the following:

• Existing market research reports
• Sales figures
• Reports from members of the sales force resulting from direct contact with the customers
• Stock movements

Secondary data is also available from sources external from the business such as: Government publications, retail audits, commercial publications, information from competitors etc.

6. Examples in point form of Secondary research may include:

• Existing market research reports
• Sales figures
• Reports from members of the sales force resulting from direct contact with the customers
• Stock movements

7. Examples in point form of Primary research may include:

• Questionnaires
• Telephone interviews
• Postal surveys
• Observation
• Consumer pads
• Test marketing

8. Random sampling

This gives each member or the total population an exact equal chance of being chosen. Its main advantage is that bias is not introduced when collecting results from sources

This is nearly the same as random sampling because the sample is divided into segments based on previous knowledge about how the population is divided up.

This involves the total population being segmented into many different groups which share specific characteristics. It is usually used to build up age and sex profiles of a population

9. The main problems associated with sampling are centred around the idea of statistical bias. This means that it is very difficult when sampling the population to obtain a completely accurate representation within the population because as the name would suggest you are still only taking a sample of the total population. This therefore means that theoretically when taking the sample you may miss out a whole age group, ethnic minority or income bracket purely by accident.

10. Segmentation is the gathering of information which shares a similar characteristic from a sample population. For example, if the data collected from a sample was displayed according to socio-economic status, then it would be said that the information had been segmented because similar characteristics have been identified within the information

11. Market share is the percentage of all the sales within a market that are held by one brand or company. This may be measured by the volume sold or the revenue generated. Analysing trends in market shares is important for a firm because it shows it’s sales position in perspective with the rest of the market.

12. Undifferentiated marketing

This is where a single marketing mix is offered to the total market. This is unlikely to be successful because most markets consist of different types of buyers with different wants and needs

This is the process of attacking the market by tailoring separate product and marketing strategies to different segments of the market. For example, the car market may be divided into an economy segment, a luxury segment, a performance segment, etc.

Is often the best strategy on offer to a small business, this is because it involves choosing to complete in one segment and developing the most effective mix for this sub-market. Jaguar for example, concentrates on producing on the luxury segment of the car market.

13. A firm may segment their market because it allows the firm to easily identify how many different sections there are within one particular segment. For example, a car manufacturer such as Toyota may want to segment the car market for instance to identify how and where it feels it’s cars may be applied with the segmented markets.

14. Firms may attempt Niche rather than mass marketing because it means that smaller firms are often able to sell to niche markets which have been either overlooked or ignored by other firms. In this way, they are able to avoid competition in the short run at least. Secondly, by targeting specific market segments, firms can focus on the needs of consumers in these segments. This can allow them to gain an advantage over firms targeting a wider market.

15. Test marketing is where a product is released into a small geographical area for a period of time prior to it’s full launch. The successfulness of the test marketing will determine the future of the product.