Market Research (Theme 1 Edexcel A Level Business)

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These revision notes cover 'Market Research', which is the second topic within 'Meeting Customer Needs' in Theme 1 of Edexcel A Level Business.

Specification topic reference: 1.1.2 Edexcel Business.

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What is product orientation and market orientation?

• Product orientated businesses develop new products that they think their customers will want, e.g. Apple.
• Market orientated businesses will do research into what their customers wants and needs are, then make products to fulfil those wants and needs.

Why do businesses need to do market research?

• It is necessary to discover what the customers’ needs and wants are.
• Businesses can work out the demand for a product and adjust their production accordingly.
• Businesses can come up with an appropriate pricing strategy.

What is quantitative research?

Quantitative research produces facts and statistics. It can be recorded easily. E.g. will ask respondents to rate how much they agree with a statement on a scale from 1-10.

What is qualitative research?

The subjective opinions of the consumers, e.g. surveys, focus groups, observations.

What is primary research?

First-hand research carried out by the business.

Pros:

• Tailored to the business;
• Data will be up to date;
• Can help understand consumer psychology;
• Can address specific issues.

Cons:

• Time consuming
• Expensive
• Risk of bias
• Potential lack of expertise.

What is secondary research?

Data collected by another body, e.g. internet, government stats, trade magazines, market reports, e.g. MINTEL.

Pros:

• Cheaper;
• Faster;
• Readily available;
• Good overview of entire market;
• Reliable and representative.

Cons:

• Not specific to the business;
• Outdated;
• Longer/more detailed reports may be expensive.

What is representative sample?

Sample must be large enough to represent the market.

The characteristics of the people in the sample must be similar to target market.

What is bias?

Market research may be biased if the interviewer allows their own opinions to affect the research.

When conducting market research, it is important to avoid bias, e.g. by not purely interviewing loyal customers.

Must also avoid interviewer bias, avoid leading questions.

How can businesses use websites, social networking, and databases to support their market research?

Websites:

• Can look at search engine analytics, e.g. Google reports.
• Can see:
  • How often people click on products;
  • How long they look at the products;
  • What times of the day/week they look.
• Can look at competitors websites to gather info on new products, prices, etc.
• Reviews, e.g. TripAdvisor.

Social networking:

• Can post content and see customers’ responses to the content.
• Look at analytics.
• Look for trends.

Databases:

• Can collect data on customers and analyse it. For example, through loyalty card data.

What is segmentation and how can it assist market research?

• Splitting up the market in different ways:
  • Demographic segments;
  • Geographic segments;
  • Income segments;
  • Behavioural segments – how often people use a product, their lifestyle, hobbies and interests.

• Can target segments who respond well to market research.

Please feel free to leave a comment below if there's anything you'd like clarifying! 

Tag: Edexcel Specification A Level Business.

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