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Market Research for a New Business (Revision Presentation)

Last updated 22 Mar 2021

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This revision presentation provides an overview of the main methods by which a new business can research its target market and gain a better understanding of the needs and wants of target customers.

• Secondary research
• Quantitative research
• Qualitative research
• Marketing research
• Primary research

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Thames Notes

3.2 Market research

By Thames Published December 31, 2017 3. Marketing , Businesswidget

Cambridge IGCSE Business Studies 3.2 Market research

3.2.1 The role of market research and methods used

Market research –  Research carried out to identify current and future consumer needs and wants

Product-orientated business –  Produce a product then try to convince people to buy it.

Market orientated business –  Perform market research to discover consumer needs and wants then develop a product that meets their needs and wants.

Businesses use market research to develop and produce products that consumer wants. Market research allows us to find out if

• People would buy the product
• What consumers like and hate about it
• The price consumers would pay for it
• Who would buy the product?
• What their competitors are offering

Types of research 

Primary research –  Collection of  original  information by directly contacting with potential or existing customers

Ways of collecting primary research

• Questionnaires + Detailed information and opinions about the product  – Expensive and time consuming   
• Focus group ( Group of consumers give detailed opinion about product) + Very detailed information  – Expensive and time consuming
• Observation  -Little details

Sample –  group of people selected to respond to market research questions such as interviews

Random sample –  Samples are chosen randomly without reasons

Quota sample –  People are selected based on certain characteristics (e.g. age, income)

Secondary research –  Information that has already been collected  and is available for use

Examples of where secondary research information can be found from

• Departmental records

Market research is not always accurate 

• Questions could be biased
• Sample may just give their own opinions
• Size of samples may be too small
• Secondary research information can be outdated or inaccurate e.g. inaccurate info from internet

3.2.2 Presentation and use of market research results

Market research results can be presented in ways such as

• Tally charts

42 Replies to “3.2 Market research”

Thank you so much, this is extremely helpful

You’re welcome 🙂

Thank you so much for these notes! They are extremely helpful and we get to revise the whole chapter very quickly. Keep up the good work!

This is great work. Notes are very helpful. Thanks alot

Hi Thames,I really appreciate your work but can you please add some economics revision notes. It will be a great help if you do this. Thanks.

sir can you pls do for economics also..i have exams in 3 weeks

The notes help me a lots, thx

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Market Research

• Market research is the systematic gathering, recording, and analysing of data about issues related to marketing products and services.

Importance of Market Research

• Market research helps identify and analyse consumer needs, preferences and behaviours. With this information, a business can make informed decisions.
• Through market research, a business can understand the market trends and the competitive landscape, which assist in strategic planning.
• Market research is essential to decrease business risks by enabling better decision-making and formulating effective marketing strategies.

Types of Market Research

Primary research (Field Research): This type of research involves the collection of data that doesn’t exist yet. This could be through surveys, interviews, observations and experiments.

Secondary research (Desk Research): This type of research involves the summarising, collating and/or synthesising of existing research. Sources for secondary data could be reports, newspaper articles, journals, government statistics etc.

Methods of Primary Market Research

• Surveys: Formal questionnaires answered by a target audience. Can be conducted online, over the phone, or through the post.
• Interviews: One-on-one conversation where questions are asked to explore the views of the individual.
• Focus Groups: A form of research where a group of people are asked questions in an interactive setting.
• Observations: The researcher watches behaviour in real-time to gather data.
• Experiments or Trials: The researcher changes variables within a controlled environment to understand if these changes affect consumer behaviour.

Methods of Secondary Market Research

• Internet: A large source of secondary data, can be through official statistics, reports, and articles.
• Libraries: Books, journals and newspapers can provide historical and latest developments in the market.
• Government and NGOs Reports: These reports often contain a wealth of information about different industries, trends and demographics.
• Competitors: Observing what competitors do is a great way to see what works and what doesn’t.

Limitations of Market Research

• It could be costly and time-consuming, especially primary research.
• Quality of research depends on the skills of the researcher.
• Data collected may be outdated or not relevant.
• There could be possible errors or bias in data collection.
• Primary research could have low response rates, affecting the validity of data.

Understanding these points about Market Research can help businesses shape their marketing strategies effectively to meet consumer needs and remain competitive in the marketplace.

3.1 – Marketing, Competition and the Customer

A market consists of all buyers and sellers of a particular good.

What is marketing?

By definition, marketing is the management process responsible for identifying, anticipating and satisfying consumers’ requirements profitably.

The role of marketing in a business is as follows:

• Identifying customer needs  through market research
• Satisfying customer needs  by producing and selling goods and services
• Maintaining customer loyalty:  building customer relationships through a variety of methods that encourage customers to keep buying one firm’s products instead of their rivals’. For example, loyalty card schemes, discounts for continuous purchases, after-sales services, messages that inform past customers of new products and offers etc.
• Gain information on customers: by understanding why customers buy their products, a firm can develop and sell better products in the future
• Anticipate changes in customer needs: the business will need to keep looking for any changes in customer spending patterns and see if they can produce goods that customers want that are not currently available in the market.

Some objectives the marketing department in a firm may have:

• Raise awareness of their product(s)
• Increase sales revenue and profits
• Increase or maintain market share (this is the proportion of sales a company has in the overall market sales. For example, if in a market, $1 million worth of toys were sold in a year and company A’s total sales was $30,000 in that year, company A’s market share for the year is ($300,000/ $1000000) *100 = 30%)
• Enter new markets at home or abroad
• Develop new products or improve existing products.

Market Changes

Why customer spending patterns may change:

• change in their tastes and preferences
• change in technology : as new technology becomes available, the old versions of products become outdated and people want more sophisticated features on products
• change in income : the higher the income, the more expensive goods consumers will buy and vice versa
• ageing population: in many countries, the proportion of older people is increasing and so demand for products for seniors are increasing (such as anti-ageing creams, medical assistance etc.)

The power and importance of changing customer needs:

Firms need to always know what their consumers want (and they will need to undertake lots of research and development to do so) in order to stay ahead of competitors and stay profitable. If they don’t produce and sell what customers want, they will buy competitors’ products and the firm will fail to survive.

Why some markets have become more competitive:

• Globalization : products are being sold in markets all over the world, so there are more competitors in the market
• Improvement in transportation infrastructures: better transport systems means that it is easier and cheaper to distribute and sell products everywhere
• Internet/E-Commerce: customers can now buy products over the internet form anywhere in the world, making the market more competitive

How business can respond to changing spending patterns and increased competition:

A business has to ensure that it maintains its market share and remains competitive in the market. It can ensure this by:

• maintaining good customer relationships : by ensuring that customers keep buying from their business only, they can keep up their market share. By doing so, they can also get information about their spending patterns and respond to their wants and needs to increase market share
• keep improving its existing products,  so that sales is maintained.
• introduce new products to keep customers coming back, and drive them away from competitors’ products
• keep costs low to maintain profitability: low costs means the firm can afford to charge low prices. And low prices generally means more demand and sales, and thus market share.

Niche & Mass Marketing

Niche Marketing : identifying and exploiting a small segment of a larger market by developing products to suit it. For example, Versace designs and Clique perfumes have niche markets- the rich, high-status consumer group.

Advantages:

• Small firms can thrive in niche markets where large forms have not yet been established
• If there are no or very few competitors, firms can sell products at a high price and gain high profit margins because customers will be willing be willing to pay more for exclusive products
• Firms can focus on the needs of just one customer group, thereby giving them an advantage over large firms who only sell to the mass market

Limitations:

• Lack of economies of scale (can’t benefit from the lower costs that arise from a larger operations/market)
• Risk of over-dependence on a single product or market: if the demand for the product falls, the firm won’t have a mass product they can fall back on
• Likely to attract competition if successful

Mass Marketing : selling the same product to the whole market with no attempt to target groups with in it. For example, the iPhone sold is the same everywhere, there are no variations in design over location or income.

• Larger amount of sales when compared to a niche market
• Can benefit from economies of scale: a large volume of products are produced and so the average costs will be low when compared to a niche market
• Risks are spread, unlike in a niche market. If the product isn’t successful in one market, it’s fine as there are several other markets
• More chances for the business to grow since there is a large market. In niche markets, this is difficult as the product is only targeted towards a particular group.
• They will have to face more competition
• Can’t charge a higher price than competition because they’re all selling similar products

Market Segmentation

A market segment is an identifiable sub-group of a larger market in which consumers have similar characteristics and preferences

Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. For example, PepsiCo identified the health-conscious market segment and targeted/marketed the Diet Coke towards them.

Markets can be segmented on the basis of socio-economic groups (income), age , location , gender , lifestyle , use of the product (home/ work/ leisure/ business) etc. Each segment will require different methods of promotion and distribution. For example, products aimed towards kids would be distributed through popular retail stores and products for businessmen would be advertised in exclusive business magazines.

• Makes marketing cost-effective, as it only targets a specific segment and meets their needs.
• The above leads to higher sales and profitability
• Increased opportunities to increase sales

Notes submitted by Lintha

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17 thoughts on “ 3.1 – Marketing, Competition and the Customer ”

a typo is there. in the example for the market share

Really helpful, thank you.

Like Liked by 1 person

These notes are really nicely summed up, helped me for last minute revisions thanks !

God bless you all for these efforts. Simply perfect. What a great way to summarize the notes. Fantastic

Like Liked by 2 people

are there do disadvantages for market segmentation? only advantages were mentioned..

The major obvious disadvantage will be that it is very expensive to produce and advertise different products for different customer markets. It could be a huge waste of time and money if the firm can’t do it effectively – products fail if they aren’t promoted well or differentiated enough to catch the attention of the target markets. There is also considerable risk – maybe the market isn’t even all that segmented or customers aren’t interested in buying a product targeted towards them as it could turn out to be more expensive.

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Market research: IGCSE Business

Subject: Business and finance

Age range: 14-16

Resource type: Lesson (complete)

Last updated

30 May 2022

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IGCSE Business Studies lesson on Market research (Cambridge, Unit 3).

Starter task PowerPoint (with various and varied learning activities throughout) Practice questions

Lesson covers primary and secondary research, quantitative and qualitative data etc. and filled a full 2-hour lesson with my Year 11s.

Full shop here: https://www.tes.com/teaching-resources/shop/smith_michael

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