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A LevelBusinessEdexcelRevision Notes1. Marketing & People1.1 Meeting Customer NeedsMarket Research

Market Research (Edexcel A Level Business) : Revision Note

Mark Collins

Written by: Mark Collins

Reviewed by: Steve Vorster

Updated on

Product and market orientation

  • 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

    • Over time, being too product orientated means the 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 classified as a product-orientated business as the business focuses on the quality of its products and regular innovations aim to increase sales

Flowchart titled "Tools of Product Orientation" with three branches: Product Research, Product Testing, and Product Focus, each in green boxes.
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 business is likely to benefit from increased demand, increased profits, and a valued brand image as its products are desirable 

      • E.g. Universities often develop new courses based on the feedback they receive from students and employers

Flowchart titled "Tools of Market Orientation" with branches to "Market Research," "Market Testing," and "Customer Focus" in green boxes.
Market orientation aims to develop products to meet needs identified by consumers during the market research process

Primary and secondary market research data

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

  • Effective market research will help the business 

    • Reduce risk when launching new products or entering new markets

    • Anticipate future needs and wants of consumers

    • Understand consumer behaviour 

    • Identify potential consumer demand 

    • Identify how much consumers are prepared to pay

    • 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, collect detailed feedback from the target market

  • Usually limited to a small group of 12-15 people

  • The group typically meets for 90 minutes to 3 hours

Advantages and 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, 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

Advantages and 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) or cheap 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

The use of ICT to support market research

  • ICT refers to information and communications technology

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

Company websites

  • Websites allow businesses to collect primary data cheaply, e.g. tracking consumer searches and analysing 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

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

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

  • Market segmentation is the process in which a single market is divided into submarkets, 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, Ryvita Lite) are targeted at the health conscious market

    • Lunch box value snacks (multipacks, Hula Hoops, etc) are targeted at families and the mass market

Advantages and disadvantages of market segmentation

Advantages

Disadvantages

  • Recognises 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

  • It 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

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    Author
    Reviewer
    Mark Collins

    Author: Mark Collins

    Expertise: Business Content Creator (Previous)

    Mark has taught Business and Economics for over 25 years in the UK, Sri Lanka and Thailand. He has an MA from UCL and was a research assistant at the Institute of Education. He enjoys creating learning resources for students and has co-authored several teaching guides. Mark has been an examiner and principal examiner for various exam boards and has a mission to demystify the examination process for students. When not teaching Mark plays guitar, harmonica, ukulele and is currently teaching himself piano. He is a firm believer in Lifelong Learning.

    Steve Vorster

    Reviewer: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.