Market Research- The systematic and objective collection, analysis and evaluation of information that is intended to assist the marketing process.
Marketing- The process of anticipating and satisfying customers' wants in a way that delights the customer and also meets the needs of the organisation.
Purposes of Market Research:
Sources of Market Research:
1. Primary Market Research
Definition: The collection of information FIRST-HAND and for a SPECIFIC PURPOSE
2. Secondary Market Research
Definition: The USE of information that has already been collected for a DIFFERENT PURPOSE
Examples of secondary market research:
1. Government publications
- Office of national statistics, economic and social trends
2. Newspapers
- Broadsheets contain articles on specific industries
3. Company records
- Sales Figures, Past Surveys, benefit from no cost
4. Magazines
- The Economist, trade specific magazines, articles and surveys
5. Competitors
- Company Reports, Investor information, marketing materials
6. Market research organisations
- They conduct research which can then be purchased by firms
7. Loyalty Cards
- Collecting data to identify consumer buying habits and some personal information
- e.g A clubcard
- Use information to target customers with promotion relevant to them
8. The internet
- Websites (Could be unreliable)
Benefits and Drawbacks of using Secondary Market Research:
Benefits:
- Quick - The Information is already available
- Cheaper than Primary Research
- Secondary surveys are usually done more frequently and so the information obtained is helpful for identifying trends over time.
- Can use more than one source to verify information
- It is easy to conduct
- Data can be dated and so misleading
- May not be relevant to the project and so cannot meet the specific needs of the firm
- You may have to spend more time finding the information you need or piecing together a number of sources
- No advantages over competitors as it is available to other firms
- May not be reliable sources
Types of Market Research
Qualitative market research is: the collection of information about the market based on subjective factors such as opinions and reasons.
Quantitative market research is: the collection of information about the market based on numbers.
Sampling
Definition of a sample: A group of respondents or factors whose views or behaviour should be representative of the target market as a whole.
- Large Samples increase reliability but cost more
- Small Samples decrease costs but are less reliable.
Sample Size
- The number of people in a sample
- Number depends on: Amount of money available and the need for accuracy
Confidence Level
- The degree to which statistics are reliable
- e.g. A 94% confidence level means the prediction made as a result of research will be correct 94 out of 100 times
Sampling Methods
1. Random Sampling
Definition: A group of respondents in which each member of the target population has an equal chance of being chosen.
Example: Stopping every 5th person in the street
- May lead to unreliable results
- May Unexpectedly select similar people
- Cheap because it does not involve careful planning of the sample before the survey is conducted.
- Less useful if the product is targeted at a specific market segment.
- Unexpected bias. E.g. sample have the same thing in common like living on the same side of the street, affecting their views on having a conservatory.
- May have to pay to gain access to a database of the target population. Can a start-up afford this?
Definition: A group of respondents comprising several different segments, each sharing a common feature (e.g. age, gender). The number of interviewees in each classification is fixed to reflect their percentage in the total target population, but the interviewees are selected non-randomly by the interviewer.
Example: If your target population is Birmingham University students:
Each sub category would have an assigned required %=
10% of English students, 20% of Law students, 5% of Psychology students, 5% of Engineering students and 60% of Mathematics students.
- Takes account of the target market
-Takes longer than random sampling
- Most likely method to suffer from bias - because people selected are not done randomly in each target segment
- Should gain more reliable results than random sampling
Here is another example of Quota Sampling:
3. Stratified Sampling
Definition: A group of respondents selected according to particular features (e.g. age, gender). However, Unlike Quota Sampling, where the final selection is left to an interviewer, in stratified sampling the subgroups and their sizes are chosen specifically.
Example: If your target population is Birmingham University students:
Each sub category would include each University degree=
English students, Law students, Psychology students, Engineering students, Mathematics students etc...
- Uses the whole population to select from and is random - everyone has an equal chance of being chosen.
- It divides the population into subgroups of interest and samples are either sequentially or randomly selected within each subgroup.
- Population information is needed for this (e.g. from the Register of Electors)
- Subgroups may not match their size in the target market
- In order to gain reliable data some segments may need to be increased in number.
- Most time-consuming method
Factors that influence sample selection methods
1. Cost/availability of finance
- Random Sampling is the cheapest.
- Quota Sampling is cheap if the target market is known
Start-ups most likely to use these two methods.
2. Time
- Quick results needed: Use Random Sampling
- Sometimes an immediate response is needed
3. The importance of market segments
- If buying habits are very different between different types of consumers, quota or stratified sampling is best.
- This is because it can examine the different patterns of behaviour of the different segments of the market.
4. Is the business targeting a specific group of customers?
-Opinions of that particular group would be needed, so quota or stratified would be best.
5. The firms understanding of its customer base
- if the firm is unaware of its type of consumers that it will attract, there is no point using quota or stratified sampling as they both depend on a prior understanding of the types of customer
- Random Sampling can help to find out this information.
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