BUSINESS UNIT 17

Why is market research needed?

It is needed so that businesses find out how many people would want to buy the product it
is planning to offer for sale. By carrying out market research, a business can identify
customer needs in a changing and competitive international environment.
Types of information
Quantitative: answer questions about the quantity of something.
Qualitative: answers questions where an opinion or judgment is needed.

Primary research
Is the collection and collation of original data via direct contact with potential or existing
customers. Also called field research.
The process of primary research
1. what is the purpose of the research
2. decide on the most suitable method of research
3. decide on the size of sample needed and who is going to be asked
4. carry out the research
5. collate the data and analyse the results
6. produce a report with the results obtained

Types
Questionnaires: set of questions to be answered as a means of collecting data for
market research
Advantages:
Detailed qualitative information is gathered.
Customers opinions can be obtained.
Disadvantages:
If questions are not well thought, the answers cannot be accurate.
Takes time and money.
Interviews: individual face-to-face questions
Advantages:
The interviewer is able to explain any question
Detailed info is obtained
Disadvantages:
The interviewer could lead the interviewee into answering in a certain way
( interviewer bias)
Time consuming
Samples
RANDOM SAMPLE is when people are selected at random as a source of information for
market research
QUOTA SAMPLE is when people are selected on the basis of certain characteristics (age,
gender)
Consumer panels
Groups of people who agree to provide info about a specific product or general spending
patterns over a period of time
Advantages:
Detailed info is provided.
Disadvantages:
Time consuming and expensive.
Observation
RECORDING (which television channels are being watched)

WATCHING (what types of vehicles pass a certain place)

AUDITS (count which products have sold well in a shop)
Advantages:
Inexpensive
Disadvantage:
The info only gives basic figures
Experiments: samples of new products are given out to consumers to taste.
Advantages:
Easy to carry out and show the first reactions to products.
Disadvantages:
People might not give their real feelings.
Many other potential consumers may shop elsewhere and they will not be asked.

Secondary research
Info that has already been collected and collated and is avaliable for use by others. Also
called desk research
Internal sources of info
Sales department records, pricing data, customer records, sales reports
Opinions of distribution and public relations personnel
Finance department
Customer service department
External sources of info
Internet
Trade and employer associations
Specialist journals
Research reports
Newspapers
Government statistics
Media reports
Market research agencies reports

Who carries out market research?

Businesses
Specialist market research agencies who will carry out any research it is asked to
do, however, they are very expensive

Accuracy of market research info

The sample selection has to be as near as is possible to the total population. The larger
the sample, the more accurate the results will be. Secondary research may not be as
accurate as first because it was initially carried out for some other purpose and you would
not know how the information was actually gathered. Statistics can become out of date, no
longer relating to current trends in consumers buying habit. Both primary and secondary
research should be used with care. It should never be assumed that the info is correct.

How to design a questionnaire?

Writing the questions
No more than 12 questions
Keep the questions short and clear
Give a choice of age groups
Avoid open-ended questions
Be careful not to lead the interviewee into an answer that may not be true
Think about the order of the questions

Carrying out a questionnaire

You may need to create a grid to put the respondents replies on. Questionnaires do not
ususally ask for the persons name, so that people will be more willing to give honest
answers to the questions. Consider:
How many people you are going to ask
At what time of the day you are going to ask
Where are you going to carry out the research