2.2 Market Research Flashcards

All 40 cards in this deck

Give two reasons why a business carries out market research.

Any two of: to find out about demand; to find out about competitors; to understand its target market; to identify market opportunities such as a gap in the market.

Give one benefit of using a questionnaire.

Any one of: the business can ask the exact questions it needs answered; it can reach many people cheaply; closed questions give quantitative data that is easy to analyse.

Give one drawback of using a questionnaire for market research.

Any one of: many people don't reply, so the sample may be small or unrepresentative; it can't ask follow-up questions.

Give one benefit of interviews as a method of market research.

Any one of: more people take part than with a posted questionnaire; answers can be followed up with further questions.

Give two things that affect which market research method a business chooses.

Any two of: its research budget; how soon it needs answers; the amount of data it needs; how large the business is.

What is market research?

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

How does market research reduce the risk faced by an entrepreneur?

It gives evidence that customers want the product before money is spent, so the business is less likely to fail.

True or false? Market research guarantees that a new business idea will succeed.

False. It reduces risk and informs decisions, but data can be unreliable or out of date.

What is primary market research?

Research where a business collects new, first-hand data itself for its own purpose.

Name four methods of primary market research.

Questionnaires, interviews, trialling and focus groups.

What is a focus group?

A group of people brought together to discuss their views on a product or service.

Give one disadvantage to a small business of using a focus group.

Any one of: it is expensive as participants may have to be paid; the moderator can influence responses, leading to bias; it takes time to arrange.

What is secondary market research?

Using data that already exists because it was collected earlier for another purpose, either by another organisation or in the business's own records (internal data).

Name four sources of secondary market research.

Newspapers and magazines, the census, websites and internal data.

True or false? A questionnaire is an example of secondary market research.

False. A questionnaire is primary research; websites and the census are secondary sources.

Give one benefit to a small business of using secondary market research.

Any one of: the research has already been carried out so it saves time; it is convenient when customers are hard to reach; government sources provide validated information.

Give one drawback of using websites for secondary market research.

Any one of: they may not give focused information about the business's own idea; they may be out of date and unreliable.

Give one advantage of primary market research over secondary research.

Any one of: it is up to date; it answers the business's own questions, so it is specific to its needs; it gives direct contact with customers.

Give one drawback of primary market research compared with secondary research.

Any one of: it takes longer to plan, collect and analyse; it usually costs more, which a small business may struggle to afford.

What is the difference between qualitative and quantitative data?

Qualitative data is non-numeric, based on opinions and views; quantitative data is numerical and can be measured and counted.

Give one disadvantage to a small business of using qualitative data.

Any one of: responses are opinions and vary a lot, making it hard to judge customer preferences; it is mostly non-numeric so it is difficult to analyse and make decisions from.

Why is it useful to combine quantitative and qualitative market research data?

The numbers show what is happening, for example a fall in sales, while the opinions explain why it is happening.

Why is the reliability of market research data important?

Unreliable data leads to poor business decisions — e.g. out-of-date websites give a false picture of the competition.

Give one cause of bias in market research data.

Any one of: leading questions that push people towards an answer; a sample that does not represent the target market; respondents saying what they think the business wants to hear.

What is a questionnaire in market research?

A set of written questions given to customers to collect first-hand data about their views.

What is an interview as a market research method?

A primary research method where a researcher asks a respondent questions face-to-face or by phone to gather detailed answers.

What is trialling as a primary research method?

Letting selected customers test or buy a product before full launch, e.g. a taste test or sale in selected stores.

What is the census as a secondary research source?

A government survey of the whole population, giving data such as population size, age and household make-up.

What is internal data as a source of secondary research?

Information the business already holds itself, e.g. its own sales records or customer feedback.

How can newspapers and magazines be used as secondary research?

They contain published articles and market reports, e.g. magazines on healthy eating for a salad bar owner.

Give one use of websites as a secondary research source.

To find published figures such as age-related population data on a local government website.

Give one advantage of trialling a new product before a full launch.

It identifies whether there is demand and gives an indication of likely sales levels.

Why does trialling reduce risk for a business?

It avoids the expense of a full launch and limits damage to reputation if the product is not well received.

Give one drawback of using census data for market research.

It is collected only every ten years, so its figures can be several years out of date.

What is another name for secondary market research?

Desk research.

What is another name for primary market research?

Field research.

Give one drawback of interviews as a method of market research.

Any one of: they are costly because interviewers must be paid; some people feel uncomfortable being stopped in the street or phoned, so they refuse or rush their answers.

Give one benefit of using a focus group.

Any one of: members are chosen to represent the target market, so their views are a good guide; they can react to the actual product, advert or packaging and say why.

Give one drawback of trialling a new product.

Any one of: a trial still costs money to set up; if the trial area does not reflect the target market, the results can mislead the business.

Which primary research methods usually collect qualitative data?

Interviews and focus groups, because they ask people for their opinions and reasons.