1.3.5 Understanding the consumer

1.3.5 Understanding the consumer

1. Market Research

   • Market research is the collection of data in order to learn about the wants and needs of the customer and possible competition.
   • Advantages of market research:
     • quantify potential demand
     • understand how much potential customers are willing to pay
     • understand customer behaviour
     • study competitors and USP
     • identify key features of the business environment
   • Limitations of market research
     • Expensive because it takes a long time
     • bias/lying in the answers
     • findings may be inaccurate
     • tricky in foreign markets, may need well trained local people to carry out
     • some markets change quickly
     • productions decisions may be made by managers who don't fully understand the market research

2. Types of Market Research

   • Primary Research is data which is obtained first hand by a firm. it is carried out directly.
     • Examples: interviews, surveys, questionnaires, focus groups.
     • ADVANTAGES
       • Directly focused on the research objectives -> it is fit for purpose and specific
       • More up to date than secondary research
       • provides more detailed research into customer views
     • DISADVANTAGES
       • Expensive for a firm to obtain especially a small business.
       • Time consuming.
       • Risk of researcher bias- survey samples may not be representative of the population
   • Quantitatave research
     • Measurable data that can be analysed and trends and conclusions can be deduced
   • Qualitative research
     • Immeasurable data that is subjective and hard to draw conclusions from due to the open nature of the information.
   • Secondary Research uses data that has already been obtained by a third-party for another purpose.
     • Examples: internal secondary data, the internet, the government, competition
     • ADVANTAGES
       • Already gathered so it is less time consuming.
       • May be gathered on a much larger scale than possible for the firm
       • Can be cheap or free to access
     • DISADVANTAGES
       • Information may be outdated or inaccurate
       • information may be biased or inaccurately collected
       • Data may not be relevant to the firm