5.3 The Purpose and Methods of Market Research

Market Research

Market research is finding out information about a chosen market (e.g. customers, competitors, products). This can include:

If customers’ requirements are being met
Is there a gap in the market for a product or service?
Would a new product would fill that gap?
Could an existing product be promoted or priced differently to persuade customers to buy it?

Primary Research

This is when the organisation gathers its own information from the market.

Methods of primary research:

Surveys: including questionnaires, phone surveys, interviews, focus groups, feedback from customers / suppliers
Experimentation: trying new ideas and recording the results
Observation: watching how customers act, such as counting customers enter a shopping centre and noting their demographics

Advantages

Can be highly specific to the business’s needs
Up-to-date

Disadvantages

Large samples are needed for accuracy
Expensive
Time-consuming
Can be difficult to administer and get right

Secondary Research

Secondary research is when the organisation uses data which someone else has gathered.

Methods of secondary research:

Published information: information taken from books, newspapers, magazines, and websites
Government publications: information collated and published by the government (e.g. Office for National Statistics)
Industry reports: organisations will gather, analyse, and produce reports which can be obtained and used (e.g. IBIS World)

Advantages

Cheap
Quick
Easy

Disadvantages

Data may not be exactly
what the business needs
Could be out of date
Data may be biased or inaccurate

Quantitative and Qualitative Data

There are two types of data which can be collected through market research - quantitative and qualitative. You need to be able to describe each type, and discuss the differences between them in different scenarios.

Quantitative Data

Data which can be measured.

Data is fact-based, and is easy to compare against other quantitative data.

Example: We counted that 12 people purchased a Hawaiian pizza and 18 purchased a Margherita pizza, therefore six more customers purchased a Margherita pizza.

Qualitative Data

Data is based on opinions, feelings, or other immeasurable factors.

Qualitative data can provide a greater depth of response, but is much more difficult to compare.

Example: We asked customers how they feel about putting pineapple on a pizza. There were lots of different opinions!

Quantitative vs Qualitative: how to remember

Quantity: an amount of something
e.g. there are 20 chicken nuggets in a box

Quality: a characteristic of something
e.g. chicken nuggets taste good