Market Research (Edexcel A Level Business)

• A product orientation is an approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer
  • The emphasis will be on creating a product first and then finding a market
  • The business has a belief that the product is superior i.e. it will sell itself
  • One problem with being too product orientated is that over time your business may move further and further away from what the market is looking for, thus increasing the risk of business failure
  • E.g. Gillette's razors can be classed as a product oriented business as the business focuses on the quality of its products and regular innovations aim to increase sales
      

A product orientation is an approach often used by inventors who research, test and produce a product well before market research has taken place
 

• Market orientation is an approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs 
  • Consumers are at the centre of marketing decisions
  • Products will be developed which respond to consumer needs
  • The result of market orientation is that the firm will benefit from increased demand, increased profits, and a valued brand image as its products become more desirable 
  • E.g. Universities often develop new courses based on the feedback they receive from students and employers
     

Market orientation aims to develop products to meet needs identified by consumers during the market research process

• Market research is the objective collection, compilation and analysis of information about a market
   
• Effective market research will help the business 
  • To reduce risk when launching new products or entering new markets
  • Anticipate future needs and wants of consumers
  • To understand consumer behaviour 
  • To identify potential consumer demand 
  • To identify how much consumers are prepared to pay
  • To identify competitors and gauge their potential strengths and weaknesses
     
• Market research data can be quantitative or qualitative
  • • Both forms are useful and any data analysis should ideally include a combination of the two

 

Primary research

• Primary research is the process of gathering information directly from consumers in the target market using field research methods such as surveys, interviews, etc
  • This gathers information that is new and does not necessarily exist in any format
    
    

Primary Research Methods

Method	Explanation
Surveys	The most widely used method of gathering primary research is to use sampling by using surveys This is where you would ask a series of questions to a certain number of people (respondents) The results from the ‘sample’ are used to make inferences in which the results of the sample are extrapolated to be true for the wider population A wide range of respondents can be reached using online survey tools such as Survey Monkey
Observation	This involves hiring someone to stand in an appropriate location and study consumer behaviour in a store or perhaps judge the potential consumer traffic at a particular location Researchers may observe the impact of packaging on consumer choice, or the impact that the particular placement of a product in a store may have on consumer choice
Interviews	The questions may be set up in a very similar way to a survey, however, an interviewer asks the questions This method takes longer but does allow the interviewee to ask follow-up questions and gather the information that can easily be missed when conducting surveys
Test marketing	Free samples are provided for a limited period to the target market to gauge their response to the product
Focus groups	Free range discussions led by a marketing specialist to collect detailed feedback on all aspects of the marketing mixfrom the target market Usually limited to a small group of 12-15 people The group typically meets for 90 minutes to 3 hours

  

The Advantages & Disadvantages of Primary Market Research

Advantages	Disadvantages
Information gathering is focused on the needs of the business and will not be available to its rivals	The sample size may be too small and unrepresentative of all of the customers leading to unreliable results
The business can get in-depth information from respondents, for example, reasons behind certain behaviour	Bias may mean that researchers can guide respondents to answer questions in a particular way Similarly, respondents may be influenced by the responses of others, or not provide accurate information
Primary market research is more up-to-date and can be used to ask specific questions and so will be more relevant	A business may need to hire a specialist market research agency to help and the process can be expensive and time-consuming

   

Secondary research

• Secondary research involves the collection, compilation, and analysis of data that already exists
  • Typical methods include purchasing market reports from specialist companies or accessing government statistical portals which provide useful information
     

The Advantages & Disadvantages of Secondary Market Research

Advantages	Disadvantages
Information is already available and so is quicker to collect than primary research thereby saving time	Information has been collected for other purposes and so may lack relevance or may not be factually correct e.g. Wikipedia
Information is often free (e.g. government websites and internet sources such as Statista) and is cheaper to collect leading to lower costs compared to primary research	Can be expensive to purchase market specific secondary data from specialist companies e.g. MINTEL reports
Suitable for a small business that lacks a large marketing budget and/or expertise	Information may be out-of-date, especially in dynamic markets

• ICT can be used to support market research in the following ways:
  

1. Company websites
   Websites allow businesses to collect primary data more cheaply e.g. tracking consumer searches and analyzing customer reviews as well as collecting secondary data about rivals e.g. prices and special offers. Pop-ups
   used on websites can also be an effective way of gathering information
   
   
2. Databases
   These can be used to store large amounts of customer information e.g. Tesco loyalty cards. Databases are also effective in collating customer e-mail addresses so that targeted customers can be surveyed later via e-mail
   
   
3. Social networking
   Focuses on gathering information about consumers via online social channels such as Twitter and Facebook. It is also useful as a method of running quick polls and surveys or tracking opinions about brands

• Market segmentation is the process in which a single market is divided into sub markets or 'segments'
  • Each segment represents a slightly different set of consumer characteristics
  • Firms often segment their markets according to factors such as income, geographical location, religion, gender, or lifestyle
     
• A market for a good such as crisps is not simply seen as one market e.g. the crisp market is divided up into many market segments such as
  
  • Dinner party snacks (Walkers Sensations, Pringles, Burts) are targeted at middle to upper earners/professionals with a premium price
  • Health conscious crisps (Walker's lite, Walkers baked, Revita lite) are targeted at the health conscious market
  • Lunch box value snacks (multipacks, hoola hoops, etc) are targeted at families and the mass market
    
    

The Advantages & Disadvantages of Market Segmentation

Advantages	Disadvantages
Recognizes that consumers are not all identical - consumer groups do not all share the same tastes and preferences	Not everyone within a segment will behave in the same way
Products and marketing activities can be altered to meet different needs of different groups of consumers and targeted more precisely	May be difficult to identify a segment and consumers can belong to multiple segments at the same time
Less expensive and wasteful than marketing products at wide market segments	Segmentation requires more detailed  market research which can prove costly (but beneficial) to the business
May increase loyalty if the consumer feels that their needs are being met which can lead to repeat purchases	A segment may be identified but it may be too small and unprofitable to cater for