IB BUSINESS MANAGEMENT HL

Unit 4.4 - Market Research

18 OCT 2019

Learning Points:

Market Research

Concerned with finding out whether consumers will buy a product or service, and is done by analyzing consumer reactions.

Reasons for market research

  • Reduce the risks associated with new product launches

  • Predict future demand changes

  • Explain patterns in sales of existing products and market trends

  • Assess the most favored designs, flavors, styles, promotions for a product

Market research process

  • Identify consumer needs and tastes.

  • Primary and secondary research into consumer needs and competitors.

  • Product idea and packaging designs.

  • Testing product and packaging with consumer groups.

  • Brand positioning and advertising testing

    • Pre-testing of the product image and advertisement.

  • Product launch and after the launch period.

    • Monitoring of sales and consumer response

Types of Market Research

Primary research

  • Gathering data or feedback first-hand, through:

    • Questionnaires (short and focused, allows open-ended questions)

    • Observation (foot traffic, queuing time)

    • Sampling (new product or campaigns)

    • Focus groups (asking groups of people)

    • Interviews

  • Advantages

    • Up to date

    • More relevant/direct

    • Confidential and unique

    • Objective

  • Disadvantages

    • Time-consuming

    • Costly

    • Questionable validity

Secondary research

  • Market analyses (shows relevant market data)
  • Government publications
  • Academic journals
  • Media articles

Secondary research should be undertaken first because it is cheap, fast, comes with plenty of sources and offers a wide range of information.

  • Advantages

    • Cheaper and faster

    •  Range of sources

    • Insight to trends

  • Disadvantages

    •  May become obsolete or out of date quickly

    • Maybe in an inappropriate format

    • Partial information

    • Widely available to competitors

Qualitative vs. Quantitative Research

  • Qualitative research

    • Used to get feedback and to understand motivation, behavior, perception through focus groups, expert panels, in-depth interviews of credible individuals.

    • Qualitative explores attitudes and opinions and can be very deeply relevant even if only a few are interviewed.

    • It can only give an indication and does not have statistical relevance.

    • Relatively inexpensive but harder to analyze, more time consuming, and results are subject to bias or skill of the interviewer.

  • Quantitative research

    • Used to get statistical data from the total (for figures) or representative sample (for opinion, decisions), using interviews that have closed questions or use ranking or sliding scales.

    • Quantitative can only ask factual answers but may not reveal reasons why.

    • A larger representative sample is needed and must be designed well so it ends up more costly to undertake.

  • Consumer surveys ask consumers for their opinions and preferences.

  • It can obtain both qualitative and quantitative information

    • How many.....

    • What do you look for...

  • 4 points of consideration when making surveys

    • What to ask?

      • Questions are unbiased and unambiguous

    • How to ask?

      • Should the survey be self-completed or filled in by an interviewer?

    • How accurate is it?

      • Accurate and valid

    • Who to ask?

      • It is impossible to ask everybody even if it is just potential members of a target market

      • A sample reflects the characteristics of the survey population

      • The sample should be significant and valid to avoid sample error

Sampling methods

  • Random sampling

    • Random selection, based on the principle that everyone is given an equal chance.

  • Stratified sampling

    • Segmentation with the number of respondents per group based on proportion to the population.

    • Majority of the population will comprise of the majority of the survey.

  • Cluster sampling

    • Used for localized surveys (e.g. towns, region, etc.).

    • Sample-based on a geographic location/ concentration of the target.

  • Quota sampling

    • A certain number or quota is set, made up of samples from each segment or random.

  • Snowball sampling

    • Respondents are networked from a respondent’s referral.

  • Convenience sampling

    • Respondents are chosen based on accessibility and proximity.