Market Research 

Purpose of Market Research 

● Identifying customer needs 

One of the aims of market research is to identify and understand the needs of customers relating to price, quality, choice and convenience. A business must make sure it is providing the right product, at the right price, in the right place, at the right time. 

● Identifying gaps in the market 

Another purpose of market research is to help a business identify gaps in the market. This is an area where there is demand for a product or service that is not being met. 

● Reducing risk 

When setting up a business, entrepreneurs face a huge amount of risk. Often they risk their own money, with many businesses failing within the first year. By undertaking market research, entrepreneurs are able to reduce this risk. Market research enables entrepreneurs to find out information, such as: 

➔ what customers want 

➔ what needs aren’t currently being met 

➔ how much competition there will be 

➔ what target market the business should aim at 

➔ how much the business should charge for its product or service 

● Making better business decisions 

A business may undertake market research to help it make better business decisions. A business may want to make a change to a product, add a new product to its range or change its location. 

Primary Research 

Primary market research, also known as field research, is new research that a business undertakes itself. It involves collecting new data and information that has not been collected before. 

Questionnaires 

A questionnaire is a set of questions to find out customers’ opinions. It can be done online, in person or through the post. When creating a questionnaire, businesses need to have a clear goal and ask questions linked to this goal Questionnaires are made up of open and closed questions: 

● Open questions aim to get detailed opinions and allow customers to respond using their own words. An example of this is, ‘What do you think of our new latte and why?’. This question would allow someone to express their thoughts about the new latte and give the reasons for their opinion. 

● Closed questions do not allow respondents to give reasons for their responses. For example, ‘Do you like our new latte – yes or no?’. 

Focus groups 

A focus group is a group interview. It can take place in person or online. In a focus group, people are asked questions or given scenarios and asked for their opinions about a product or service. 

Observations 

Observations involve watching customers to find out their reactions to certain products or services. For example, this could involve watching someone try a drink for the first time or monitoring which products a customer notices first when they go into a shop. 

Test Marketing

This involves selling a new product in a restricted geographical area to test it and sale levels before a national launch. 

Secondary market research 

Secondary market research, also known as desk research, involves gathering existing data that has already been produced. Secondary research can be collected from both inside (internal) and outside (external) a business. 

Different Sources of Secondary Data 

• Business websites e.g. business history, price lists, product information, outlets and mews releases
• Commercial publications e.g. data gathered by market researchers such as Mintel or Verdict, which is then sold on to businesses
• Competitors e.g. annual reports, price lists, product catalogues, PR material
• Government publications e.g. population data, economic data such as inflation, retail spending and unemployment
• Internal Data e.g. sales figures, budgets, reports, stock data, complaints and previous research
• Media e.g. newspapers, magazines, directories and the television

Market research produces data that can be categorised as qualitative or quantitative data. 

Qualitative data: 

• is usually expressed as opinions 
• includes descriptive information 
• is gained using open-ended questions, eg ‘What do you like about the product and why?’ 

It provides a business with detailed information that cannot be expressed in a graph or chart. While qualitative data gives detailed information, it can be time consuming and costly to gather and analyse. 

Quantitative data: 

• is usually numerical data 
• is gathered through the use of closed questions, such as ‘yes’ or ‘no’ responses, multiple-choice options or a rating system 
• can generally be expressed in a graph or chart

Role of Social Media in collection Market Research Data 

The Importance of the Reliability of Market Research Data

Although carrying out maket research can reduce the risk of products failing in the market, it is important to ensure that the data gathered is reliable. If market research data is inaccurate or out of date, any decisions based on the data are likely to be unsound. The reliability of market research data often depends on the number of people questioned and whether they represent the views of everyone. Ideally, information could be gathered from every single person in a market. However, this would take too long and cost too much money. To overcome this problem, businesses use a sample of people. A sample is a much smaller group, however, so the behaviour and views of the sample must be representative of all the people in the market, otherwise the data will be biased and unreliable.

A business should also appreciate that human behaviour is unpredictable. Although people may indicate their intentions in a questionnaire, what they do in reality might be quite different. People might change their minds or misunderstand the question. They might also give answers that they think the interviewers wanted to hear. Finally, if questionnaires are poorly designed or interviewers have not been trained, the quality of the research carried out might be poor. These issues must be addressed to ensure the reliability of data.