1.3.5 Understanding the consumer

1.3.5 Understanding the consumer

1. Types of market research

   • Secondary market research, also known as desk reseaarch, uses data that has been gathered previously by another organisation. It is often freely available
     • Advantages
       • Is available immediately
       • May be inexpensive or free
       • Normally cheaper than primary research
       • Provides information on market size and market share
     • Disadvantages
       • May be out of date
       • Difficult to guarantee accuracy
       • Can be expensive to purchase (e.g. market reports)
       • Rivals can access this data too
     • Examples
       • Market reports
       • Government data
       • Economic historic and forecast data
       • Internet
       • Trade publications
   • Primary market research is obtained 'first hand' by the business that is interested in the results. It involves fieldwork and can be directly related to the needs of the individual business . This is aslo known as field research
     • Advantages
       • Is up to date as it is conducted as required
       • Can be tailored to the precise needs of the business
       • Can produce data which rivals do not have access to
     • Disadvantages
       • Can be expensive
       • Can be time consuming to collect and interpret data
       • Methods such as focus groups can require specialist skills
     • Examples
       • Questionnaire/ Survey
       • focus group
       • observation
       • test marketing
   • Quantitative market research is marekt research conducted where the results are numerical and can be analysed statisitically
   • Qualitative market research is market research to examine opinions and feelings
   • Good market research will link quantitative and qualitative data to build a detailed picture of customers' preferences

2. Sampling involves collecting data from a number of people to represent the target market or the population as a whole.

   • Cluster sampling. This is when parts of the population are sampled because of their geographic group or “cluster”.
     • Advantages
       • More cost effective for face to face interviews.
       • Can gather opinions of specific , targeted groups of people.
     • Disadvantages
       • Can be expensive if the clusters are too large.
       • Businesses need to have a clear idea of who to target when selecting their cluster.
   • Random sampling means that members of the population have an equal chance of being selected to take part in the research.
     • advantages
       • Eliminates bias
       • Wide spread opinions from a variety of people.
     • Disadvantages
       • Can be time consuming to set up
       • Can be costly
       • Requires more effort than convenience sampling, for example.
   • Quota Sampling aims to get a sample that is representative of the overall population. The population is divided (stratified) by important factors such as income, age and location and then a sample (quota) from each section are chosen to take part.
     • Advantages
       • Quick and easy way of getting a sample.
       • True reflection of the wider population
     • Disadvantages
       • Not random, so there’s a risk of bias.
       • Need to understand the population and have a lot of information before they’re divided.
   • Convenience Sampling. This method of sampling is when you ask people who are willing to take part and available at the time.
     • Advantages
       • Cheap
       • Easy because people are close and willing to participate.
     • Disadvatanges
       • People who are near and willing to take part might not be the people you necessarily wish to target.

3. Market segmentation means identifying different groups of consumers in a market where each group has distinctive preferences. Products and marketing strategies can be differentiated to suit individual segments

   • Advantages
     • Helps the business to get to know its customers
     • focuses business strategy on a specific target audience
     • encourages the business to specialise to meet the needs of a particular segment
     • helps provide focus for the allocation of business resources
   • Disadadvantages
     • costly and time-consuming process
     • could over-narrow the focus of the business
     • could lead to the manufacturing of too many different products
   • Types of segmentation
     • behavioural
       • based on how customers react to, and behave towards certain products. Involves analysing customers' brand loyalty, usage, attitudes, responses and price sensitivity to products and services on offer
     • geographic
       • is by town,county,country
     • demographic
     • psychological
       • involves analysing customers according to their lifestyle,values,personalities, attitudes