1.3.5 Understanding the consumer

Question 1

Define market research

Answer 1

Activity that gives a business information about its product or service, its consumers, its competitors or the market it operates in.

Question 2

How can businesses use market research?

Answer 2

• To identify what’s happening in the market right now
• Predict what might happen in the future
• To explore new possibilities in the market

Question 3

What can market research do for businesses?

Answer 3

• Make businesses more responsive to customer needs
• Allow established businesses to keep up with trends and remain competitive
• Reduce risks for start-ups
• Help businesses gain a competitive advantage.

Question 4

What is primary research and what are some examples?

Answer 4

Gathering information first hand from an original source.

Examples are focus groups and questionnaires

Question 5

What is Secondary research and what are some examples?

Answer 5

Finding and using information that has been gathered by someone else.
Examples would be Google or the Office of national statistics (ONS)

Question 6

What are the Advantages of primary research?

Answer 6

• Can be designed specifically to suit the purpose of the business
• Information is relevant and up to date
• Information is not available to competitors

Question 7

What are the disadvantages of primary research?

Answer 7

• Can be expensive
• Can be time consuming
• Can give misleading information if there are sampling errors or questions are not worded properly

Question 8

What are the Advantages of Secondary research?

Answer 8

• Can be done very quickly

- Can be much cheaper than primary research

Question 9

What are the disadvantages of secondary research?

Answer 9

• Can be outdated
• May not be accurate information
• Most likely not exactly specific to researchers needs

Question 10

What is quantitative research?

Answer 10

Research based on numerical data, produces statistical information

Question 11

What is qualitative research?

Answer 11

Research based on consumer’s attitudes and opinions

Question 12

What are quantitative and qualitative research used for by businesses?

Answer 12

Both are used to quantify likely demand and gain insight into consumer behaviour

Question 13

What is sampling?

Answer 13

When a small section or sample of the market is chosen to be representative of the whole specific group.

Question 14

What 2 things does a sample need for it to be useful and accurate?

Answer 14

Unbiased and representative of the whole target market

Question 15

The larger the sample the more accurate it is likely to be.

True or false?

Answer 15

True

Question 16

What does market segmentation mean?

Answer 16

It means dividing the market into groups of consumers with similar characteristics

Question 17

What are some ways businesses segment their market?

Answer 17

• Income, age, gender
• Socio-economic grouping
• Geographic location
• Ethnicity or religion
• Hobbies and interests
• Education of customers

Question 18

What are the advantages of segmentation?

Answer 18

• The more precise a segment is provided for, the more likely it is that a sale will be made
• Segmenting the market reduces direct competition
• A premium price can be charged if market segments get exactly want
• Can develop brand loyalty