4.4 Market Research
What will we study?
By the end of this unit you should be able to:
By the end of this unit you should be able to:
- Explain how and why organisations carry out research
- Differentiate between quantitative and qualitative market research
- Analyse the role of market research
- Evaluate the different methods of market research
- Explain the different sampling methods available to market researchers
- Interpret the results from data collection
- Discuss the ethical considerations of market research
Market research: The process of collecting, recording and analysing data about customers, competitors and the market.Market research is a broad and far-reaching process. It is concerned not just with finding out, as accurately as possible, whether consumers will buy a particular product or not, but also with trying to analyse their reaction to:
1. To reduce the risks associated with new product launches
By investigating potential demand for a new product or service the business should increase the likely chances of a new product achieving satisfactory sales. Although market research cannot guarantee success, market research is still a key part of new product development (NPD).
2. To predict future demand changes
A travel firm may wish to investigate social and other changes to see how these might affect the demand for holidays in the future. For instance, the growth in the number of single-person households may suggest that there could be a rising demand for ‘singles’ holidays.
3. To explain patterns in sales of existing products and market trends
Market research is not just undertaken for new or planned products, it needs to be conducted for existing products too. Sales at the fashion retailer Gap had, by the end of 2008, fallen in 28 of the last 31 months. Unless Gap managers were prepared to find out why this happened, they would not be able to take remedial action.
4. To assess the most favoured designs, flavours, styles, promotions and packages for a product
Consumer tests of different versions of a product or of the proposed adverts to promote it will enable a business to focus on the aspects of design and performance that consumer’s rate most highly. These can then be incorporated into the final product.
MARKET RESEARCH CAN THEREFORE BE USED TO DISCOVER INFORMATION ABOUT:
- Different price levels
- Alternative forms of promotion
- New types of packaging
- Different methods of distribution.
1. To reduce the risks associated with new product launches
By investigating potential demand for a new product or service the business should increase the likely chances of a new product achieving satisfactory sales. Although market research cannot guarantee success, market research is still a key part of new product development (NPD).
2. To predict future demand changes
A travel firm may wish to investigate social and other changes to see how these might affect the demand for holidays in the future. For instance, the growth in the number of single-person households may suggest that there could be a rising demand for ‘singles’ holidays.
3. To explain patterns in sales of existing products and market trends
Market research is not just undertaken for new or planned products, it needs to be conducted for existing products too. Sales at the fashion retailer Gap had, by the end of 2008, fallen in 28 of the last 31 months. Unless Gap managers were prepared to find out why this happened, they would not be able to take remedial action.
4. To assess the most favoured designs, flavours, styles, promotions and packages for a product
Consumer tests of different versions of a product or of the proposed adverts to promote it will enable a business to focus on the aspects of design and performance that consumer’s rate most highly. These can then be incorporated into the final product.
MARKET RESEARCH CAN THEREFORE BE USED TO DISCOVER INFORMATION ABOUT:
- Market size and consumer tastes and trends
- The product and its perceived strengths and weaknesses
- The promotion used and its effectiveness
- Competitors and their claimed unique selling propositions
- Distribution methods most preferred by consumers
- Consumers’ preferences for packaging the product.
