1.3.5 Understanding the consumer

1.3.5 Understanding the consumer

1. Types of market reaserch

   • Qualitative
     • Qualtitative data is First hand quality information, doesnt involve satistics rather it involves data expressed as opinions, includes descriptive information and open ended questions
   • Quantitative
     • Quantitative data is Low quality numerical data, gathered through the use of closed ended questions such as yes and no, can be generally expressed in a graph or chart
   • Primary reaserch is field reaserch/collecring data that has never been collected before. Methods involve surveys, questionairs, focus groups and observations
     • Advantages: Specific to the business, provides detailed infomation,relevant and up to data, can gather a mix of quan and qual data
     • Disadvantages: time consuming, expensive, sometimes difficult to collect
   • Secondary reaserch is gathering existing data. Methods involve internet reaserch,market reports, government reports
     • Advantages: quick and easy to gather, Can provide industry-specific information, Often easy to analyse
     • Disadvantages: Not specific to the business, Could be out of date, May be biased or inaccurate

2. What is sampling? In market research, sampling means getting opinions from a number of people, chosen from a specific group, in order to find out about the whole group.

   • Cluster sampling is: Units in the population can often be found in certain geographic groups or "clusters" for example, primary school children in Derbyshire. A random sample of clusters is taken, then all units within the cluster are examined.
     • Advantages: Quick and easy, Doesn't need complete population information, Good for face-to-face surveys
     • Disadvantages: Expensive if the clusters are large, Greater risk of sampling error
   • Convenience sampling is: Using those who are willing to volunteer and easiest to involve in the study.
     • Advantages: Subjects are readily available, Large amounts of information can be gathered quickly
     • Disadvantages: The sample is not representative of the entire population, so results can't speak for them - inferences are limited. future data, Prone to volunteer bias
   • Random sampling is: This makes sure that every member of the population has an equal chance of selection.
     • Advantages: Simple to design and interpret, Can calculate both estimate of the population and sampling error
     • Disadvantages: Need a complete and accurate population listing, May not be practical if the sample requires lots of small visits over the country
   • Quota sampling is: The aim is to obtain a sample that is "representative" of the overall population. The population is divided ("stratified") by the most important variables such as income, age and location. The required quota sample is then drawn from each stratum.
     • Advantages: Quick and easy way of obtaining a sample
     • Disadvantages: Not random, so some risk of bias, Need to understand the population to be able to identify the basis of stratification

3. What is market segmentation: Market segmentation splits up a market into different types (segments) to enable a business to better target its products to the relevant customers.

   • Advantages of segmenting
     • Better matching of customer needs: Customer needs differ. Creating separate products for each segment makes sense
     • Enhanced profits for business: Customers have different disposable incomes and vary in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits
     • Better opportunities for growth: Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being sold an introductory, lower-priced product
     • Retain more customers: By marketing products that appeal to customers at different stages of their life ("life-cycle"), a business can retain customers who might otherwise switch to competing products and brands.
     • Target marketing communications: Businesses need to deliver their marketing message to a relevant customer audience. By segmenting markets, the target customer can be reached more often and at lower cost
     • Gain share of the market segment: Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors
   • Types of segmentation
     • Behavioral: E.g 'customers wanting a value for money impulse buy.' : Rate of usage, Benefits sought, Loyalty status, Readiness to purchase
     • Geographic E.g customers within 10 miles of the M25: Customer location, Region, Urban/rural, Acorn, classification
     • Demographic E.g A level university students: Age, Gender, occupation, Socio-economic group
     • Psychographic E.g 'customers who prefer to buy organic food': Personality, Lifestyle, Attitudes, Class