The Purpose of Market Research (AQA GCSE Business)
Revision Note
Why Carry Out Market Research?
Market research is the process of systematically gathering data from consumers, which can be used to inform business decisions
It helps businesses identify products and services they can develop in response to the needs and wants of their customers
It can establish the level of demand for its products
It can determine the level and nature of competition in the target market
It enables the firm to develop the correct marketing mix
On-going market research is especially important in dynamic markets where there is significant competition and frequent changes in customer preferences
Diagram: The Purpose of Market Research
Market research helps businesses identify customer needs and wants, recognise gaps in the market, reduce risk and investigate competitors
1. Identify customer needs and wants
Market research can identify customer needs before competitors do so, allowing a business to benefit from first mover advantage
As customer needs can change rapidly, market research can help a business avoid stocking goods that are no longer in demand
2. Recognise gaps in the market
Detailed market research can identify areas of the market in which customers' needs are not yet being fully met
Appropriate products can then be developed which precisely meet these needs, for which customers may be willing to pay a premium price
3. Reduce risk when launching new products or entering new markets
Careful market research can clarify the features of products customers desire, the price they are willing to pay, how they respond to promotion activities, and the best ways to distribute products
This is likely to limit marketing mistakes, improve budget decisions and improve the chances of a successful product launch or entry into a new market
4. Investigate the potential strengths and weaknesses of competitors
Understanding the product range, promotional methods and pricing strategies used by rivals, as well as the ways in which they interact with customers, can help a business make their own products stand out
Quantitative & Qualitative Research
Market research data can be quantitative or qualitative
Quantitative data is based on numbers and could include financial reports (e.g. sales, costs), market data (e.g. markets share) or summaries of data gained from primary research (e.g. on a scale of 1-10 rate our customer service)
Qualitative data gathers descriptions or explanations based on conversations, discussions, impressions, and emotional feelings and is usually gathered through primary research
Limitations of Quantitative and Qualitative Data
Limitations of Quantitative Data | Limitations of Qualitative Data |
---|---|
|
|
Examiner Tip
In the exam, you could be asked to explain a reason why a given business might conduct market research. 'Explain' questions require the answer to be developed, so give a clear reason and develop the impact. You will not be given any marks for defining market research.
Example
Denhams Ltd should carry out market research to find out about the specific needs of its target market [1] so that the new product it is currently developing has a greater chance of success [1].
Last updated:
You've read 0 of your 10 free revision notes
Unlock more, it's free!
Did this page help you?