Market Research

                                                                                         

A business needs to find out how many people would want to buy the product it is offering for sale.If there is not a very big market for the product, a great deal of money could be wasted producing goods than not many people will buy .It could even cause the business to go bankrupt .Therefore, it is very important that market research is carried out accurately. Market research is used to try to find out the answers to these questions.

• What feature of my product do people like or dislike?
• Would they be willing to buy my product?
• What price would they be prepared to pay? 
• Where would they be most likely to buy my product? 
• What type of promotion would be effective with these types of customers?
• What is the competition like?

If you are going to undertake coursework then you will also need to carry out your own research  using some of the methods outlined in this unit.

Types Of  Information:

 Market research can find out:

• Quantitative Information: which answers questions about the quantity of something, for example, how many sports shoes were sold in the month of  December ? Or what percentage of children drinks a certain sort of cola?
• Qualitative information, which answers questions where an opinion or judgment is necessary, for example, what do customers like about a particular product? Or why do more women than men buy the company's products ?                                                                                                             Both types of information can be gathered as a result:

• Primary Research or field research.
• Secondary Research or desk research.

Primary Research:

Primary Research, or field research, is the collection and collation of original data.It involves direct contact with potential or existing customers.The research will usually have been planned and carried out by the people who want to use the data: it is firsthand.It can be an expensive way to gather information and will usually be for a specific purpose, for example to test the market to see if a new product would be likely to succeed. There are various types of primary research method:

• Questionnaires: Postal, face to face or by telephone.
• Interviews individual face to face or by telephone group interview.
• Consumers Panels
• Observation recording, watching or audits.
• Experiments.

Method Of Primary Research:

Questionnaires from the basis of most primary research.Questionnaires may be conducted face to face. Deciding what questions to ask is difficult if you are to be sure of getting accurate results. Some questions may not be very clear: some questions may lead the respondents to answer in a certain way which may not be what they really think.The researcher also needs to decide who to ask.

Advantages Of Questionnaires: 

• Detailed qualitative information can be gathered about the product or service.
• Customer' opinions about the product or service can be obtained.

Disadvantages Of  Questionnaires:

• If questions are not well thought out, the answers to them will not be very accurate. It may be very misleading for the business if it is though that a product is liked by consumers, when in fact the respondents were only saying they thought the product was quite attractive but they would not actually buy it.
• Carrying out questionnaires can take a lot of time and money. 

Interview

When interviews are used, the interviewers (the person asking the questions) will have ready prepared questions for the interviewee (the person answering the questions)

Advantages Of Interviews:

• The interviewer is able to explain any questions that the interviewer does not understand.
• Detailed information about what the interviewees like and dislike about the product can be gathered. 

Disadvantages Of Interviews:

• The interviewer could lead the interviewee into answering in a certain way; this could be done consciously or unconsciously, resulting in inaccurate results due to interviewer bias.
•  Interviews are very time consuming to carry out and, therefore,they are often an expensive way of gathering information.

Consumer Panels:

This is where groups of people agree to provide information about a specific product or general spending patterns over a period of time. Panels may also test new products and then discuss what they think of the product, explaining what they like about it.

Advantages Of Consumer Panels:

They can provide detailed information about consumers' opinions.

Disadvantage Of Consumer Panels:

They can be time consuming, expensive and biased if some people in the panel are influenced by the opinions of others.

Observation:

This can take the form of :

• Recording:  For example, meter can be fitted to monitor which television channels are being watched.
• Watching:  Which includes such activities as counting how many different types of vehicles pass particular billboards .

Advantages Of Observation:

It is quite an inexpensive way of gathering data.

Disadvantages Of Observation:

This information only gives basis figures. It does no provide the business with reasons for consumer decisions.

Experiments:

An example of this type of research is where samples of new products are given out to consumers in supermarkets to taste, and then they are asked to say what they think.

Advantages Of Experiments:

They are relatively easy to set up, carry out and gather consumers' first reactions to the products.

Disadvantages Of Experiments:

• People might not give their real feelings so as not to offend you.
• A representative sample of consumers may not be asked, as only be people who shop in those particular supermarkets are asked.
• Many other potential customers may shop elsewhere and they will not be asked.

Whether questionnaires, interviews, consumer panels, observations or experiment are used to find out about a product or service depends very much on the type of product or service. Experiments are much easier to carry out with food products than with a service, while questionnaires can be used for most products and services.

Secondary Research:

Secondary research, or desk research, is the use of information that has already been collected and is available for use by others. This is either from internal sources or external sources.

Internal Sources Of Information:

A lot of information may be readily and cheaply available from the firm's own records. The type of qualitative information available will be from the sales department, which will hold detailed data on which brands of products have been selling well and in which area.

• Sales department sales records, pricing data, customer records,sales reports.
• Opinions of distribution and public relations personnel
• Finance department 
• Customer Service Department

External Sources Of  Information:

These are sources of information which are obtained from outside the company . These sources are many and varied and tend to depend on the type of product that is being researched. This type of data is inevitably of a general nature as it has been gathered for some purpose other than the research that is being undertaken.It can still be useful, as long as the limitations are taken into account when using the information.Examples of external sources of information include:

• Trade and employers' association
• Specialist journals 
• Research reports
• Newspapers
• Government reports and statistics 
• Media reports
• Market research agencies reports.

Government statistics are detailed sources of general information about such things as the population and its age structure. This is available in most countries.