3.4 Market research

Refers to the collection and analysis of information on existing and potential customers to determine their opinions, beliefs, and feelings. It can be primary or secondary.

Why?

• So companies can get a better understanding of their customers, competitors, and market.

How businesses conduct market research

• Primary: creating new information
• Secondary: using existing information

Primary research

• Carried out when businesses need specific up-to-date information

Surveys

• Gathers lots of information relatively quickly
• Cheap to collect data
• Can be biased
• Face-to-face surveys can be expensive
• Responses may be poorly worded

Interviews

• Detailed data
• Can change/tailor questions during the process
• Time-consuming
• Expensive
• Problems quantifying data
• Small number of respondents involved; findings may not fully represent the whole market

Focus groups

• Small groups of targeted customers with similar characteristics and/or interests are asked questions and discuss topics within the group
• Detailed information from specific segments of the market
• Allows the gathering of information from customers
• Participants may be shy or scared to share opinions
• Expensive
• Time-consuming

Observation

• Can collect lots of data
• Doesn't rely on participants' willingness to participate
• Is time-consuming
• Interpretation of findings demands a lot of energy
• Bias may still be involved if participants know they are being observed

Secondary research

• Involves collecting and analyzing data that already exists

Market analyses

• Reports that contain information about a product, market, or industry (e.g. Statista)
• Less time-consuming to collect than primary research
• Provide in-depth information
• Suitable for businesses who do not have expertise to gather data
• Can be expensive
• Can become old relatively quickly
• Data is not exclusive to the business; competitors also have access to it

Academic journals

• Publications that contain academic theory
• Contains up-to-date information
• Data is reliable as it has been produced by scholars
• Information may not always be relevant for business
• Likely requires subscriptions

Government publications

• Official documents published by governments
• Reliable data
• Up-to-date data
• A lot of information available
• Likely available for free
• Has a lot of information which can be a drawback as most data is not suitable for business
• Some may require payment to access

Media articles

• Written by journalists and authors
• Are released frequently
• A lot of information available
• Many sources do not require a subscription
• Potential bias from authors
• Articles can go out of date very quickly
• Some magazines require subscriptions to be able to access them

Online content

• Gathering of data from the internet
• Access to a range of information
• Information is usually cheap or free
• Companies' websites provide tailored, specific information
• There is so much information available that it can be hard to find suitable data
• As anyone can publish things online, data may be inaccurate
• Potential bias
• Data can become outdated quickly

Qualitative vs quantitative research

• Market research can be quantitative or qualitative
• Quantitative: gathers numerical data allowing researchers to determine patterns and correlations
• Qualitative: gathers descriptive data like explanations and opinions (non-numerical)

Sampling

• Involves getting opinions from a select group of people in order to find out about the market as a whole

Quota

• Researchers select a number of candidates from different market segments and then group them together according to various characteristics, and then a proportional sample is taken from each sub-group
• Fast and easy to administer
• Not very expensive
• Takes proportion into account
• May have bias involved
• Needs to understand the population to be able to apply results to the market as a whole

Random

• Makes sure that every number in the population has a chance of being selected
• Results are random
• Free of bias
• Free of sampling errors
• Sample may not be representative of the population
• Researchers require a list of the population to be able to conduct random sampling

Convenience

• Sample is made up of whoever is willing to participate and volunteer in research
• Easy access
• Respondents are available
• Cheap
• Lots of information can be gathered quickly
• Easy to carry out research
• Unlikely that sample will represent the population accurately