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Chapter-Eight---Understanding-Markets-and-Customers
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Chapter Eight – Understanding Markets and CustomersWhat is the Purpose of Market Research? The Process of Market Research
KEY TERM(S)
Market Research If conducted frequently, appropriately and
The collection and analysis of data aimed at assisting accurately, market research can prove an invaluable Define
the marketing process of a firm. tool in assisting a firm in their decision making. needs
Manager Data
Primary Market Research decisions collection
Data collected first hand for a specific purpose.
Market
Research
Secondary Market Research
Feedback
Data that already exists and is non-specific. to
Analyse
data
managers
Qualitative Data The primary aim of market research is to reduce
Interpret
Research based upon the motivations behind buyer the level of risk by providing the information findings
behaviour e.g. why did they buy blue jeans? required to make better decisions.
Quantitative Data Examples of its use include:
The stages of market research are time consuming
Research based purely upon numerical data e.g. how Seeing whether sales targets have been met.
and therefore expensive. However, it does provide
many pairs of blue jeans were sold? Customer reactions to your brands.
firms with the means of improving their market
Who customers are buying from and why.
competitiveness through a better appreciation of
Market Mapping Identifying changing tastes and fashions.
their customers and the external environment.
Identifying key variables that differentiate brands Competitor actions.
within a market and then plotting them on a diagram Primary Market Research
to identify gaps or potential niches in the market. Market research however, does not offer any
guarantees of business success. Consider the fact
Primary research is actually usually conducted
Sampling that without managers with the skills to properly
after secondary research as it is used to fill-in
Collecting a small amount of data with the aim that interpret the meaning of the information, or the
gaps in your knowledge of the market. It is more
this is representative of the larger population. The lack of financial support to implement marketing
expensive to conduct and more time consuming.
larger the sample size the more reliable the data but plans or the machinery to produce the goods, then
also the more expensive and time consuming. the research loses its value to a firm.
Correlation Remember also that the market is constantly
A measure of the strength of the relationship existing changing and that research can quickly become
between two variables e.g. rain and umbrella sales. obsolete. Tastes and fashions change rapidly!
, Chapter Eight – Understanding Markets and Customers
KEY TERM(S) Examples of Primary Research Sources Include: Market research helps a firm
to better understand
Confidence Levels Surveys and questionnaires their customers and seeks
The probability of the findings being statistically Focus groups answers to the 5W’s of who
accurate. Often a firm will look to achieve a 95% Interviews buys the goods; what they
level of confidence e.g. the results will be accurate buy; where they buy
19 times out of 20. This needs a large sample size. Overview of Primary Research them; when they purchase
them and finally why?
Benefits Problems
Extrapolation The data is up to date. It is expensive and time
A forward projection of the underlying trend data The vast quantities of data made available to firms
consuming to collect.
used to make simplistic forecasts. This assumes It is specific to your needs. through the Internet and other marketing
that the past is a good indicator of the future. Risk of bias. methods would have been too much to analyse in any
Secondary Market Research meaningful way a few years ago. The sheer volume of
Price Elasticity data would have slowed down the decision making
A measure of the responsiveness of demand to a Secondary research is a less specific and usually less process through information overload.
change in the price of a good. time consuming process but it provides firms with a
useful overview of the market. It makes use of data Modern technology
Income Elasticity that already exists in various forms. however, has allowed firms
A measure of the responsiveness of demand to a to overcome this problem
change in a customers’ income levels. Examples of Secondary Research Sources Include: and to combine data from
many sources to help in their
Normal Good Government publications e.g. ONS analysis and decision making.
A good for which demand will typically rise when Company reports The use of this ‘big data’ has
income levels increase and fall when income levels The internet allowed complex patterns
decline e.g. luxury cars. of consumer behaviour to be
Overview of Secondary Research
identified through forecasts
Inferior Good Benefits Problems and correlation analysis.
A good for which demand will fall when income The data is often quick Data is often obsolete and
and easy to obtain. this can be misleading. Big Data still requires the right data to be collected in
levels rise and rise when income levels fall e.g.
supermarket budget label goods. the first place or the results will lack value. Technology
It is cheaper to acquire It is not specific to the can aid decision making but it provides no guarantees!
than primary research. needs of your business.
Substitute
A good which is a direct alternative for another Data available to everyone
including your competitors.
good e.g. Pepsi is a substitute for Coca-Cola.
Using Technology & Understanding the Customer
KEY TERM(S)
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