Uses & Benefits of Market Research
Market research provides managers with information about what customers want and need and what will influence them to buy a product. Benefits of market research include:
- Provides information on size of market and potential for market growth.
- Helps an organisation decide what products to offer for sale, at what price and through which channels of distribution.
- Helps an organisation to identify cost effective methods of promotion that will reach their target market segment(s).
- Reduces the risks of introducing new products – product features can be updated at the research and development stage.
- Helps an organisation to plan ahead and predict how wants and needs may change over time, thus allowing time to develop new products.
Types of Market Research – Field and Desk
Field Research involves gathering primary information – information collected first-hand for a specific purpose.
Advantages of Field Research
- Information is reliable as collected first-hand so the source is known.
- Information is relevant as the organisation designs the questions.
- Information has been collected recently so should be up to date.
Disadvantages of Field Research
- Expensive as researchers are paid to research and process findings.
- Takes time to carry out which can cause delays in decision making.
Desk Research uses secondary sources – second-hand information from a previously published source, collected for a different purpose.
Advantages of Desk Research
- Information already exists so is less costly and obtained more quickly.
- Can give a picture of the wider overall business environment.
Disadvantages of Desk Research
- Information may be out of date and therefore inaccurate.
- Information may not be directly relevant to the decisions being taken
- Information may also be available to competitors.
- Information may contain bias as collection method may not be known.
Methods of Market Research – Field Research
Interviews – a researcher asking questions verbally face to face or over the telephone.
Advantages – the interviewer can ask more complex questions and if interviewees are uncertain, the interviewer can explain. The interviewer can ask follow-up questions to get a more detailed response.
Disadvantages – it is time-consuming and expensive as interviews are only conducted with one person at a time and the interviewer may have to travel to carry out the interview (if face-to-face). In the case of a telephone interview, the travel time is removed but it can be more difficult to get people to cooperate over the phone.
Questionnaire/Survey – written questions are handed out, posted out, e-mailed out, or set up through a hyperlink.
Advantages – questionnaires can be sent out to large numbers of people at a relatively low cost – particularly if sent by email. They can be completed at a time that suits the customer best.
Disadvantages are that questions cannot be too detailed as they cannot be clarified by an interviewer. Many people ignore questionnaires so an incentive may be needed eg a prize draw entry.
Test Marketing – trialling a product in a restricted location or target market to get an idea of whether the product will sell before entering into mass production.
Advantage – changes may be made to the product based on feedback before a full-scale product launch.
Disadvantage – test marketing can still be costly to carry out and the findings may accurately represent the wants and needs of all possible customers.
Focus Groups – a group of customers take part in a focused discussion about the product, under the guidance of a trained interviewer.
Advantage – detailed feedback can be gathered.
Disadvantages – still need to pay an interviewer, and some people in the group may dominate the discussion.
Observation – monitoring consumer behaviour by watching eg counting people using a particular shop or product.
Advantages – it is relatively cheap to operate as a trained researcher is not needed and does not intrude on customers.
Disadvantage – information can be of limited value as it does not explore reasons behind customer behaviours.
Methods (Sources) of Desk Research
Internal desk research sources include information from sales figures gained from EPOS (Electronic Point of Sale) and loyalty cards.
This keeps track of individual customers’ shopping habits and helps the organisation adapt its marketing activities.
Other internal sources include staff reports which can give employee opinion on what is happening in the market and why.
The organisation may also review customer complaints made directly to the business to get feedback on what customers are dissatisfied with.
External desk research sources include:
Viewing competitors’ web sites to compare products and prices.
This type of research is free to access and immediately available allowing decisions to be made quickly.
Organisations will not get details on all their competitors’ decisions as not everything is on the web site.
Government statistics can provide information on income and employment levels which can help an organisation decide if, where or when to launch new products.
Information is available free of charge. Information may not be up-to-date if statistics were collected some time ago, however it should be free from bias as the government is a trusted source.
Newspaper or magazine articles can give an insight into customer preferences as they may review products and provide updates on lifestyle changes.
Information is cheap to collect but may be biased as it reflects the opinions of the writer.
On-Line Reviews – such as those posted on social media, Trip Advisor, Trust Pilot or Amazon – allow the organisation to monitor what is being said about its products and therefore can allow it to make improvements to their product, price, place and promotions.
