The Purpose & Methods of Market Research Flashcards

All 28 cards in this deck

What is market research?

The process of collecting information about the market or what customers want, to help a business be more successful and spot gaps in the market.

What three things does a business collect information about when it carries out market research?

Demand, competition and the target market.

What is a gap in the market?

An area where there is demand for a product or service that is not currently being met.

What is a target market?

A group of customers which a business aims its product or service at.

Give two benefits of carrying out market research before starting a business.

Identify market opportunities / gaps in the market; identify customers' needs.
Also accepted: identify competitor actions, reduce risk by testing ideas, produce a business plan, predict demand/sales.

True or false? Once a business has carried out market research, it does not need to do it again.

False. Customer needs change over time, so research must be kept up to date.

What is primary market research?

Research that collects new, first-hand data for the business itself.
e.g. questionnaires, surveys, interviews, focus groups, observations.

What is secondary market research?

Research that uses information already collected by someone else.
e.g. internet research, newspapers, market reports, government reports.

True or false? Internet research is a method of primary market research.

False. Internet research is secondary research; focus groups, questionnaires, interviews and surveys are primary.

What is a questionnaire?

A set of questions designed to find out customers' opinions, conducted online, in person or by post.

In a questionnaire, what is the difference between open and closed questions?

Open questions let customers answer in their own words and give reasons; closed questions give fixed options such as yes/no or a rating scale.

What is a survey?

A method of asking questions to get opinions and learn about customers' experiences with a product or service.
It can be done by online or paper questionnaire, interview or focus group.

What is an interview as a method of market research?

A primary method where a researcher asks a customer questions in person, by phone or online.
It can gather both qualitative and quantitative data.

What is a focus group?

A group interview where people are asked questions or given scenarios and asked for their opinions about a product or service.
It is primary research and gives more in-depth information than a questionnaire.

What sources are used in internet research?

Competitors' websites, newspaper articles and social media.

State one benefit and one drawback of primary market research.

Benefit: it is specific to the business, detailed and up to date. Drawback: it is time consuming and expensive to collect.

State one benefit and one drawback of secondary market research.

Benefit: it is quick, cheap and easy to gather and analyse. Drawback: it is not specific to the business and may be out of date, biased or inaccurate.

Why is social media a useful research tool for a business?

It reaches huge numbers of customers cheaply and on a large scale, and shows the latest tastes, trends and competitor behaviour.

Which type of market research usually suits a new business with very little money and time, and why?

Secondary research, e.g. internet research, because it is quick, cheap and easy to gather.

What is qualitative data?

Data expressed as opinions and descriptive information, gained from open-ended questions.
e.g. customers' opinions of a product.

True or false? Quantitative data tells a business exactly what customers think of a product.

False. Quantitative data lacks specific opinions; qualitative data gives customers' reasons and views.

What is market size?

The total sales of all businesses in a market, measured by value (sales revenue) or volume (units sold).

What is the formula for market share?

$\text{market share} = \frac{\text{sales of the business}}{\text{total sales in the market}} \times 100$

What is the formula for percentage change in a figure such as sales?

$\text{percentage change} = \frac{\text{change}}{\text{original value}} \times 100$

Name two business decisions that market research findings can help a business make.

Whether to make changes to a product, add new products to its range, or change location.

What can happen if a business bases decisions on unreliable market research data?

Unwise decisions, wasted money, unsold products and even business failure.

True or false? Qualitative market research data can usually be presented in a graph or chart.

False. Qualitative data is descriptive and cannot easily be shown in a graph or chart; quantitative (numerical) data is what is displayed in graphs and charts.

What are the steps to interpret market research data shown in a table or chart?

e.g. a table of a café's customer numbers for 2022, 2023 and 2024

1. Read the title, headings and units — the figures are customers per year.
2. Compare the figures to spot the trend — customer numbers rise each year.
3. State what it means for the business — demand is growing, so the café could open for longer hours.