5.3 - The purpose and methods of market research

Rhianna Nicoll
Mind Map by Rhianna Nicoll, updated more than 1 year ago
Rhianna Nicoll
Created by Rhianna Nicoll over 3 years ago
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Year 10 Business Studies (Section 5) Mind Map on 5.3 - The purpose and methods of market research, created by Rhianna Nicoll on 08/27/2018.

Resource summary

5.3 - The purpose and methods of market research
  1. role of market research
    1. Key words
      1. market research - the process of gathering analysing and processing data relevant to marketing decisions
        1. market segment - a group similar needs within the overall market
          1. segmentation - occurs when a market is divided into different groups of needs and wants
            1. primary market research - (aka field research) involves gathering information for the first time e.g. using questionnaires to conduct a survey of potential customers
              1. secondary market research - (aka desk research) involves using data that already exists e.g. information in a newspaper or published on a website
              2. the purpose of market research
                1. a business needs to gather information about the competitors, customers and their products to understand how to make and market products for a profit
                  1. when it has been completed a business can make more informed decisions
                    1. process of gathering, analysing and processing data relevant to marketing decision
                    2. Market researches gather information on:
                      1. demand - size and growth of the market and different segments in it
                        1. market share - sales of each producer as a percentage of total sales in the market
                          1. competition - number as the size and number of competitors
                            1. target market - as business is likely to focus on part of the market with similar needs and wants known as market segment e.g. children between ages 10-13 for lego
                      2. types of data used in market research
                        1. quantitative
                          1. involves the use of numbers e.g. the size of the market, the growth of the market or number of customers a business has
                          2. qualitative
                            1. involves opinions and views but not statically reliable information e.g. why people like a certain washing up liquid
                          3. Use of market research
                            1. to identify opportunities e.g. demand for electric cars
                              1. to weigh up different possible actions e.g. advertise on the internet or not
                                1. to assess effectiveness of actions that have been taken e.g. after advertising on the internet did sales go up
                                2. methods of market research
                                  1. collecting market research.
                                    1. primary information // field research

                                      Annotations:

                                      • can be tailored to meet businesses needs and is up to date but it can be more expensive to gather and results can be misleading 
                                      • Advantages:  telephone surveys - can call when convenient to business  door-to-door - can see reactions and people may be more likely to tell the truth  focus groups - in-depth responses  internet research - quick, cheap
                                      • disadvantages: telephone survey - cannot see reactions e.g. body language. people may not answer phones/be reluctant to give answers  door-to-door - time consuming  focus group- small groups may not reflect all target customers  internet research - may not find views of target customers 
                                      1. questionaries and surveys

                                        Annotations:

                                        • where people are interviewed that may the product and asked a range of questions now done increasingly through online questionnaires 
                                        • types of surveys:  telephone - calling customer to obtain views, its relatively cheap but difficult to get people to answer questionnaires - often completed online and they need to be asked carefully to avoid bias of incorrect responses  customer/supplier feedback - asking what people think and asking suppliers on issues like speed of response and how it compares to other busineses 
                                        1. observations

                                          Annotations:

                                          • e.g. watching shoppers buying habits in a supermarket 
                                          1. consumer trials

                                            Annotations:

                                            • experimenting such as offering customers a trail of a new product and gathering feedback
                                            1. hall tests
                                              1. focus groups

                                                Annotations:

                                                • small groups of people selected to give their views on a particular business e.g. brand image or product compared to competitors 
                                      2. secondary information // desk research

                                        Annotations:

                                        • Advantages:  can be gathered quickly and cheaply as data is already gathered e.g. by specialist market research companies like Mintel also provide information on large parts of the population which would be unrealistic for a business to gather e.g. economic growth of country 
                                        • disadvantages:  include existing data that may not be what the business wants e.g. spending habits for the whole country rather than in one place  the existing data may be out of date e.g. last government census of population was 2011
                                        1. articles
                                          1. books
                                            1. newspapers
                                              1. internet
                                                1. CD/DVD
                                      3. Market size
                                        1. can be measured by the value of the volume of sales using the equation
                                          1. volume of sales = number of units sold x price per unit
                                            1. 2,000 units are sold at £5 means volume of sales = 2,000 x £5 = £10,000
                                        2. Market growth
                                          1. market growth = change in market size/original market size X 100
                                            1. original market size £10,000 and the current market zee is £12,000. change in market = £2,000 market growth = £2,000/£10,000 X 100 = 20%
                                          2. Market share
                                            1. market share = sales of the product/total market sales X 100
                                              1. if product sales are £5,000 and total market sales are £100,000. market share = £10,000/£100,000 X 100 = 10%
                                            2. from market share to market size
                                              1. if market research shows the market share of a product and its sales, it is possible to calculate the total market size
                                                1. for example , if a product has 10% of market and sales are £10,000
                                                  1. calculate 1% 10% = £10,000 10%/10 = 1 £10,000/10 = £1,000 so 1% = £1,000
                                                    1. calculate the size of the whole market by multiplying both sides £1,000 x 100 = £100,000
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