Methods of Market Research (Cambridge (CIE) IGCSE Business): Revision Note

Why do businesses use market research?

• Market research is the collection, compilation and analysis of information about a market

• Effective market research helps a business

  • Reduce risk when launching new products or entering new markets

  • Identify and understand the future needs and wants of customers

  • Understand consumer behaviour 

  • Identify how much consumers are prepared to pay

  • Identify potential gaps in the market which can be exploited to increase sales

  • Identify competitors and gauge their potential strengths and weaknesses

• With effective market research businesses are well-placed to make informed decisions about the most effective way to use their valuable resources and develop a suitable marketing mix

• On-going market research helps businesses to update their marketing strategy in line with customers' changing needs and preferences

Primary market research

• Primary market research is the process of gathering information directly from consumers in the target market 

  • This process gathers information that does not already exist and is specific to the needs of the business collecting it

• Surveys, interviews and focus groups are common primary market research methods

  • These methods make use of questionnaires to organise research questions and responses

Primary market research methods

Surveys

• A series of questions are posed to a defined number of people using a questionnaire

• Surveys can be conducted face-to-face, online, by phone or by post

Interviews

• A formal meeting between a researcher and a customer using structured or semi-structured questions

• Interviews allow detailed responses and observation of body language

Observation

• A market researcher watches consumer behaviour in real time, such as shopping patterns, product placement, or packaging influence

Focus groups

• Small group discussions led by a specialist to gather detailed feedback from target customers on products, services, or marketing strategies

Sampling

• Primary market research is conducted with a small representative sample of the market as a whole

  • Market researchers use carefully designed sampling methods from which accurate conclusions can be drawn about likely customer preferences and behaviour

  • In general, the larger the sample size, the more likely it is that results of market research activities will reflect the market as a whole

Why is sampling useful?

• It saves time and money

  • It is usually too expensive and time-consuming to collect data from every potential customer

  • Sampling allows the business to get useful information quickly and at a lower cost

• It can provides reliable insights

  • If the sample is chosen carefully, it can represent the larger market

  • This means the business can still learn about customer preferences, buying habits, or opinions without needing to ask everyone

• It helps a business make better decisions

  • Sampling allows a business to test ideas, such as new products or adverts, before launching on a larger scale

  • This helps reduce risk

• It is useful for identifying trends

  • By asking a smaller group of people from different segments, a business can spot patterns in customer behaviour or preferences

Secondary market research

• Secondary research involves the collection, compilation, and analysis of data that already exists

  • It helps businesses make informed decisions without carrying out their own primary market research

• Businesses must weigh up the reliability of secondary market research and aspects such as cost, relevance and availability of data when making a decision on which secondary data to use

Sources of secondary market research

Competitor websites

• Businesses can visit the websites of their competitors to gather useful information about their products, pricing, promotions, customer service and branding

Why are they useful?

• Comparing prices and features

• Identifying current marketing strategies

• Understanding how competitors position themselves in the market

Government sources

• Governments publish a wide range of free and reliable data, including statistics on population, employment, income, business activity and economic growth

Why are they useful?

• Spotting demographic trends (e.g. ageing population)

• Analysing the economic climate (e.g. inflation, interest rates)

• Understanding changes in consumer spending or regional business conditions

Market reports

• Market research companies, such as Mintel or Euromonitor, produce in-depth reports on industries, consumer trends and market performance

• These are usually detailed and may be expensive to access

Why are they useful?

• Assessing market size and growth

• Understanding consumer behaviour and preferences

• Identifying future opportunities or threats in a market

Trade magazines

• Magazines focused on a specific industry, often published by trade associations or business groups

• They include news, expert opinions and case studies

Why are they useful?

• Staying up-to-date on trends, new products, and innovations

• Monitoring competitor activity within the industry

• Gaining insight into best practices and future developments

Evaluating secondary market research

Factors influencing the accuracy of market research data

• The reliability and accuracy of market research depends upon a large number of factors, including:

1. Question phrasing

• How questions are phrased in questionnaires or other tools used to conduct surveys

  • Questions should be written in such a way that they do not encourage a predetermined response

2. Sample selection

• How carefully the sample is selected

  • Including its size, types of respondent chosen and how closely these reflect the intended target market

3. Skills of interviewer

• Who conducts the research including their experience, research skills and source (primary or secondary?)

• Potential for bias when conducting research or analysing results

  • The research and its analysis should be as objective as possible

4. Time and place of research

• When and where the research is conducted

  • Customer tastes, fashions, economic conditions and technology change, giving data a relatively short period of usefulness 

  • Customers in different geographic areas can have very different opinions