Market Research (Edexcel A Level Business): Revision Note

Product and market orientation

• 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-oriented 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-oriented business, as the business focuses on the quality of its products, and regular innovations aim to increase sales

• 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 that 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

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 the future needs and wants of consumers

  • Understand consumer behaviour 

  • Identify potential consumer demand 

  • Identify how much consumers are prepared to pay for a product/service

  • 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.

  • Primary research gathers information that is new and does not necessarily exist in any format

Primary research methods

Advantages and disadvantages of primary market research

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 that provide useful information

Advantages and disadvantages of secondary market research

Using 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, such as 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 email addresses so that targeted customers can be surveyed later via email

Social networking

• This 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 by 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 and/or lifestyle

Segmentation methods

Geographic segmentation

• Geographic segmentation involves breaking up a market into groups of customers who live, work or spend their leisure time in defined locations

  • Urban and rural customers' needs relate to their surroundings

    • E.g. city-dwellers are likely to purchase small, electric vehicles, while those who live in the countryside tend to prefer larger, all-terrain vehicles

  • Customers in warmer countries make different purchasing decisions to those living in cooler climates

    • E.g. sales of air-conditioning units in Italy and Turkey are significantly higher than in Germany and the UK

  • Within a country, customers living in different regions have varied preferences

    • E.g. France is well-known for its regional food specialties, with residents of southern départements generally preferring a Mediterranean diet, whilst those in more northern regions consume more dairy products and red meat

Behavioural segmentation

• Customers make different lifestyle, health or dietary choices that can provide opportunities for businesses

  • E.g. travel companies target different packages at families, thrill-seekers and those looking to pursue a specialist interest such as cuisine or art

  • Beyond Meat's entire product range is aimed at vegans, vegetarians and flexitarians cutting down on animal protein

    • Its plant‑based burgers and sausages are sold in supermarket meat aisles

• Some purchasing decisions are based on thorough research, whilst others tend to be impulse buys

  • E.g. home store Dunelm places low-priced household essentials such as dusters and scented candles close to the checkout area

• Other behavioural factors include

  • the frequency of purchase

    • E.g. whether customers buy a product often or as a one-off, for regular consumption or as an occasional treat

  • whether customers are brand loyal

    • E.g. those that stick with the same brand may be rewarded with loyalty benefits, such as points for each £ spent, while those that switch brands may be attracted by special offers, such as BOGOF (Buy One Get One Free)

Demographic segmentation

• Demographic segmentation involves breaking up a market into groups of customers with similar characteristics, such as age, gender and family circumstances

  • Men and women often have different purchasing preferences

    • Men tend to spend more than women when shopping

    • Women are more price-sensitive shoppers than men, buying more reduced-price items and using price promotions more frequently

  • As populations age, spending patterns are changing

    • Spending on specialist services such as personal care and single-person travel has increased significantly

  • Many products are aimed at different age groups, who are likely to have different interests, influences and spending power

    • E.g. in 2022, consumers in the United States spent an average of $1,945 on clothing, with most being spent by the generation born between 1965 and 1980, known as Generation X

  • Many countries have increasingly ethnically diverse populations

    • Markets for clothing, food and celebration items can be targeted at specific ethnic or religious groups

Segmentation in the crisps market

• A market for a good such as crisps is not simply seen as one market; i.e. the crisp market is divided into many market segments, such as:

  • Dinner party snacks (Walkers Sensations, Pringles, Burts) with a premium price are targeted at middle to upper earners/professionals

  • Health-conscious crisps (Walker's Lite, Walkers Baked, Ryvita Lite) are targeted at the health-conscious market

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

Advantages and disadvantages of market segmentation