1.3.5 Understanding the Consumer

1.3.5 Understanding the Consumer

1. Types of Market Research

   • Primary research is research carried out directly
     • Examples: surveys, interviews, observations, focus groups and tests
     • Advantages: research can be specific, effective and trustworthy, up-to-date, relevant and new
     • Disadvantages: high costs, time consuming, the accuracy, validity and reliability depends on the interviwers mood / professionalism
   • Secondary research is research carried out by a third party
     • Examples: carried out by governments / organisations, information gathered in the library, internet or newspapers
     • Advantages: lower costs involved, less time consuming, can gather information about a whole mass market and therefore see trends
     • Disadvantages: more general information, not as useful (less specific), may be inaccurate, can also be used by competitors, may be time-dependent (take into account context)
   • Quantitative data is numerical and involves statistics
     • Advantages: accurate, a larger sample can be made, straight forward answers
     • Disadvantages: difficult to set up, focusing on statistics can lead to ignoring other information, can still be misleading
   • Qualitative data is a description about attitudes towards a product / business / market
     • Advantages: more flexible, can capture changing attitudes, can explains reasons whereas statistics can't
     • Disadvantages: sample bias, samples could be small and not reflect views overall,
   • Market research is the collection of data in order to learn about consumer wants and needs
     • Advantages: know the price level in the market, quantify potential demand, understand customer behaviour, study competitors and USPs, identify key features of the business environment
     • Disadvantages: findings may be inaccurate, hard in foreign markets, some mearkets change quickly, product decisions may be taken by managers who dont understand the research, bias, sample size needs to be considered

2. Sampling means getting opinions from a number of people, chosen from a specific group, in order to find out about a whole group

   • Cluster Sampling is when parts of the population are sampled because of their geographic group e.g primary school children from Sheffield
     • Advantages: gather opinions of specific, targeted audiences, more cost effective for face-to-face interviews
     • Disadvantages: expensive if clusters are large, need a clear idea of which cluster to ask
   • Random sampling means members of the population have an equal chance of being chosen
     • Advantages: eliminates bias, wide variety of opinions and people
     • Disadvantages: time consuming, costly, greater effort required
   • Quota sampling has the aim of getting a sample that is representative of the overall population
     • Disadvantages: risk of bias, need to understand the whole population before you can divide them
     • Advantages: quick and easy, true representation of entire population
   • Convenience sampling is where you ask people who are willing to take part and available at the time
     • Advantages: cheap and easy
     • Disadvantages: the people who are willing to do it may not be who you want to target

3. Market segmentation splits up a market into different types / segments to enable a business to better target its products to target customers

   • Advantages: better matching to customer needs, enhanced profits for businesses, better opportunities for growth, retain more customers, target marketing communications, gain share of the market segment
   • Disadvantages: hard to segment a market effectively, may be poor and inaccurate results
   • Behavioural Segmentation
     • Examples: Rate of usage, benefits sought, loyalty status, readiness to purchase
   • Psychographic Segmentation
     • Examples: Personality, lifestyles, attitudes, class
   • Geographical Segmentation
     • Examples: Customer, location, region, urban / rural, classification, ACORN
   • Demographic Segmentation
     • Examples: Age, gender, income, occupation, socio-economic group