Market research
• Market research involves gathering and
interpreting data from customers and others
in order to identify and satisfy the needs of
customers.
Role or purpose of market research
Market research will provide the business with data that
can be used:
• To describe the current situation in the market place:
• To identify new market opportunities;
• To decide on the appropriate mix of new products;
• To improve the marketing mix of existing products;
• To segment the market;
• To understand the marketing strategies of competitors;
and
• To predict what will likely happen in the future in the
marketplace
When and how ?
• Market research is
frequently carried out
when a business plans to
launch a new product.
• It helps to reduce the
risk of failure by helping
to make the right
marketing decisions.
• Marketing decisions
cannot be based on
hindsight but on
research.
• Marketing research data
come in two basic forms:
• Primary data obtained
through field research
• Secondary data obtained
through desk research
Secondary (desk) research
This is the collection of secondary data, which has
previously been collected by others for another
purpose but which may be still relevant.
Someone sitting in an office can gather such data
and hence is referred as desk
research.
The main sources of secondary data
can be:
Internal :
profit and loss a/c.,
balance sheet,
stock records,
sales statistics,
etc.
External:
reference books,
company reports
govt statistics,
external publications
of banks ,
websites,
etc.
Advantages of desk research
• It is easier and quicker to gather as the data
already exist.
• It is cheaper as it costs less to collect
• There is a huge range of sources making
secondary data more accessible
Disadvantages
• The data collected may become outdated
quickly and therefore less reliable.
• The data was collected for another purpose
and may no longer be relevant
• Unlike primary data, secondary data is also
available to competitors.
Primary research
This is research to gather new (primary) data directly from the
persons concerned (customers, competitors and others) by going
out on the field.
Advantages of primary research
Primary data is up to date and more reliable whereas secondary
data is often outdated
Primary data is more relevant as it is collected for a specific
purpose unlike secondary data which is collected for another
purpose
The primary data is unique as the research is done first hand and
no rivals has access to them.
Disadvantages of primary research
It is a difficult and time consuming task as the process has to
be properly designed .
Primary research can be more expensive than secondary research as
it is a more time consuming process
Biases can arise in selecting a wrong sample or from non-response
Primary data can be gathered in 4 main ways:
Surveys (questionnaires and interviews)
Observation
Experimentation (test marketing)
Psychological test (consumer panel or focus group)
Surveys through Questionnaires
A questionnaire is a series of questions designed to find out the views
and opinions of the target persons (e.g. customers).
The data can be obtained through
- interviews (face to face or over the phone)
- self completed questionnaires
Personal interviews involves an interviewer obtaining information
from one person face to face. Questions can be clarified instantly
and it is quick to complete. The questionnaires may contain many
open questions to gather the views of the person.
Telephone interviews is often used as an alternative to personal
interviews. A greater number of people over a wider area can be
reached. However , many people may not be willing to take part
Self completed questionnaires
These are questionnaires that are completed by a sample of
respondents on their own time. They can be sent by and returned
to the business personally, via the post or internet.
When the post or internet is used a greater number of people over a
wider area can be covered.
However, there can be a high rate of non-response
Advantages of using questionnaires
• If well designed, questionnaires can be easy
to complete
• Surveys allow a wide coverage of
respondents
• A wide range of questions can be set
Advantages of using questionnaires
• If well designed, questionnaires can be easy
to complete
• Surveys allow a wide coverage of
respondents
• A wide range of questions can be set
Characteristics of a good questionnaire
Directly relevant to the research objective: irrelevant question
should be avoided
Comprehensive: should include both open and closed questions.
Open questions allow issues to be discussed
Simple to understand and easy to answer: the questions should be
clear and technical language should be avoided
Free from bias: in order to collect meaningful data. E.g. do you prefer
Diet Pepsi or Diet Coca? rather than Is Diet Pepsi better than Diet
Coca?
Observation
This involves watching how people behave or respond in different
situations. Observations can be carried out by filming, photo taking
or watching survey.
Observations are often used hotels, restaurants and theme parks.
Advantages
Observation record people’s actual behavior rather than what they say
A great number of people can be observed
Disadvantages
It does not necessarily reveal why people behave in a certain way.
The use of filming or photo taking can be considered unethical
Experimentation (Test marketing or piloting)
Experimentation is the process of introducing marketing activities to
a group of people to measure their reactions. It is often used to test
a product in a small area before it is launched on a much larger scale
or abandoned.
For example, an ice cream manufacturer may give samples to
customers in a shopping mall to find out which flavor they prefer.
This can save a lot of time and money to identify errors or areas
which need improvement. It also helps to reduce risks and
uncertainties
Consumer panel or focus group
A group of 8 to 10 consumers meet
with a psychologist and general discussion takes place to obtain the
required information on a product
Qualitative research vs. Quantitative research
Qualitative research
Qualitative research is used to obtain information on the motivation
behind consumers behavior, such as:
What are the product qualities that encourage people to buy brand x
rather than brand y?
What additional features customers would like in a product?
It is usually carried out by the use of group discussion also known as
consumer panel or focus group or open questions in a survey..
Quantitative research
Quantitative research is used to obtain factual information such as:
What percentage of the population prefers brand x to band y?
What percentage of the target market is likely to buy a new product?
Quantitative data concentrate on numbers and they can be
statistically analyzed and represented on graphs, charts, etc.
Quantitative research is usually carried out by the use of close question
questionnaires and sampling.
Sampling (HL)
A sample survey is a survey of less than the population. In marketing
research, it will be impossible to obtain data from everyone in the
market. Therefore, a sample representing the market is used. The
method can be: random sampling or non-random sampling
Random sample
• A random sample is one which is chosen in such a way that every
• member of the population has an equal chance of being selected.
• It is carefully planned. A sample frame is required. This is a list of
all members of the target population. Often this is impractical.
• It is a fair representation of the population and may reduce bias
• However, it is time consuming and difficult to select such a sample
• It may select people not be part of the target group
Non-random sample
• A non-random sample
is one where every
member of the
population does not
have an equal chance of
being selected
• Non-random sampling
include:
• Quota sampling
• Cluster sampling
• stratified sampling
• snowballing
Quota sampling
• Quota sampling involves setting up a quota (a
target number of people) and then interview is
conducted with everyone met up to the quota.
• E.g., if we want to know the percentage of
people who prefer a certain ice cream, we set a
quota of 50 persons and interview the first 50
coming out of a super-maket.
• Some times, we can divide the target population
into segments (e.g. sex), and interview a quota in
each segment (e.g. 20 males and 30 females)
Quota sampling (cont’d)
It is easy, quick and cheap to operate
However, the sample is not a good representation of the population
Stratified random sampling
Under this method, the population is divided into segments or strata,
based on previous knowledge about how the population is divided up.
Then a random sample in each strata is selected for interview. For
example, if a manufacturer knows that his sales are 40% from area A,
35% from area B and 25% from area C, then the stratified sample
must obtained respondents from each area in the same proportion .
Samples are more representative of particular segments
It can be difficult and expensive to identify relevant segments
Multi stage or Cluster sampling
Cluster sampling is used when getting feedback from respondents
involves too much travelling, time, or money. Therefore a few areas
Or clusters are chosen (e.g. north, south, east and west). A sample
of population in each chosen cluster is selected and interviewed.
It is quicker, easier and cheaper to use than any other method when
the population is widely dispersed.
By selecting just a few locations, the results may be biased because
people living in the same area may share the same views
Snowballing
Snowballing refers to surveys or interviews carried out with
individuals who then suggest other names to increase the sample.
Hence, there is a snowball effect. This is common in financial services,
insurances and other services where the population is unknown.
It is an easy, quick and cheap way to build a sample.
However, it may lead to a bias sample as respondent may refer their
friends with the same views.
Systematic sampling x
This may provide an approximation of a random sample, by selecting
every nth item after a random start. For example, if a sample of 20
from a population of 800 is decided, then every 40th item is selected
after a random in the first 40, should be selected.
Sampling errors
Sampling errors refer to the difference between the results obtained
from the sample and what should have been revealed. They arise
because the sample used is not representative of the population.
The failure is due to a wrong sample, non response from those chosen
or incomplete/ outdated population frame.
Non sampling errors
Non sampling errors are caused by problems in the designed of the
questionnaires and in carrying the survey, e.g. wording of the
questions, confusion in data collection and in conducting the survey.
Conduct of market research
Market research can be conducted by the firm’s own staff. However,
More and more research are contracted out to private agencies.
Advantages of using market research agencies
Agencies have the expertise of selecting an appropriate sample thus
reducing the amount of bias in the results of the research.
Some agencies have the experience and ability to conduct research
in certain areas thus providing more accurate information.
Disadvantages
The cost of hiring an external agency can be very expensive
The use of an external agency may deprive the firm’s staff from
being exposed to the needs of customers and therefore better
understand them.
Hall P56 Q1,2
Sampling:
P65 Q3