Chapter 52- Identifying customer needs: Market research analysis

Question 1

What needs consideration once the initial market research plan on how the information is to be collected is in place?

Answer 1

• Consideration needs to be given to the sampling method used
• If they don’t have enough data, then the results won’t be accurate
• To improve the likelihood of gaining reliable data there are several sampling techniques that can be applied

Question 2

What are the two types of sampling?

Answer 2

1. Probability
2. Non-probability

Question 3

Definition of population

Answer 3

• The total number of items or people that research is interested in

Question 4

Probability sampling methods

Answer 4

• it gives all the members of the population a
  known chance of being selected for inclusion in the sample

Question 5

Simple random sampling

Answer 5

• Individuals are randomly selected from a list of the population
• Every single individual has an equal chance of selection
• this method insures that there is no bias in choosing the sample
• This method is very slow and expensive

Question 6

Systematic sampling

Answer 6

• It’s a variant of the simple random sampling method
• When using this method, every ‘nth’ person from the list is selected
• A potential problem with this method of sampling concerns the arrangement of elements in the left

Question 7

Quota sampling

Answer 7

• It involves splitting the population into subgroups according to the distribution in the population
• Example: 52% of a given population is male and 48% is female the samples that are questioned will be in this proportion
• This method is the cheapest and most effective method of sampling
• It’s a non-random form of sampling, so the results are not statistically representative

Question 8

Convenience sampling

Answer 8

• Uses those people who are easy to do
• example: if doing house to house the researcher may only do those that are at home when they call on that day
• It may not consider everyone
• This method can cause the results of convenient sampling to be distorted

Question 9

Stratified sampling

Answer 9

• only interview those with key characteristics
• This method can be then used with the quota and random method to breakdown the information further
• it is an effective way to target your specific customer
• This method means that others who may have an opinion on the product are not included as they do not fit the sample characteristics
• Stratified sampling methods also come in 2 types- proportionate and disproportionate

Question 10

Proportionate sampling

Answer 10

• The strata sample sizes are in proportion to the strata population sizes
• Example: if the first Statum is made up of males then as there are around 50% of males in the UK population the male strata will need to represent around 50% of the total sample

Question 11

Disproportionate sampling

Answer 11

• The strata are not sampled according to the population sizes but higher proportions are selected from some groups and not others

Question 12

Cluster sampling

Answer 12

• Respondents drawn from a small geographical area selected to represent a target population as a whole
• This method makes sampling quicker and easier as the respondents are all in one area ( used when data is needed quickly )
• This method may be unreliable if area chosen is not representative of the target population

Question 13

Non– sampling errors

Answer 13

• Respondent may give the answer they think is being asked for
• It’s usually a politically or socially accepted answer
• But it’s not a honest answer that reflects what they actually think
• May give the first answer that comes into their head when the respondent is in a hurry
• Deliberate false answer may be given
• occasions when respondents give an answer that they think will please the interviewer

Question 14

Sampling errors

Answer 14

• It’s the difference between the mean value of the sample and the actual or true mean value of the population
• example:
  Mean value of sample= 25
  Actual meaning of population= 26
  Sampling error= 1
• As sampling size increases sampling error falls

Question 15

What is the average or mean also referred to as?

Answer 15

• Central tendency

Question 16

How do you calculate the mean?

Answer 16

• Together the aggregate and divide by the number of results

Question 17

Normal distribution

Answer 17

• when looking at the results of any research, the data can be considered in terms of how it is distributed
• Distribution is bow shaped
• Most figures fallen in the middle
• To consider the distribution of the data still further it can be compared to the mean (average).

Question 18

Standard deviation

Answer 18

• This measures the spread of data compared to the mean
• It measures how far from the mean any finding, observation or response is, and can therefore be used to assess whether the result is roughly in line, more than, or less than the average or mean
• the closer the results are to the mean the narrower the spread of data is
• A large standard deviation suggest there is a wider spread around mean

Question 19

How do you work out standard deviation?

Answer 19

• Calculate the mean
  E.g. 36
• Find out how far each value deviates from the mean (compare to 36)
• If less than the mean, it will be a minus number and if more than the mean, it will be a positive number
• Square all the numbers
• once the numbers are squared they are added together and divided by the number of units
• square root this answer

Question 20

What does standard deviation show?

Answer 20

How far away from the mean any result is

Question 21

What does correlation mean?

Answer 21

• It’s a term used to show how closely two factors or variables are linked to each other

Question 22

How can a future trend be seen?

Answer 22

• once the figures have been plotted, it’s possible to continue the line
  -the data is extrapolated

Question 23

Market segmentation

Answer 23

• After research to find out about its customer base, it can begin to split its market into different groups
• Each group will have different characteristics and needs

Question 24

What does knowledge of different groups within a potential customer base help the business with?

Answer 24

• it can help the business to target those consumers

Question 25

What methods can be used to gain knowledge of the different groups?

Answer 25

- Differentiated products -Special offers - Targeted advertising - The range of goods stocked

Question 26

Types of market segmentation

Answer 26

- Age - geography - Gender - Social class - Residence - Religion - Ethnic group - Lifestyle - Occupation - Income - Education

Question 27

What does the Acorn stand for?

Answer 27

A Classification of residential neighbourhoods

Question 28

What does the Acorn system of classification allow businesses to target?

Answer 28

- People live in a particular type of accommodation - This system categorises different types of housing such as flats, terraced housing, large detached housing

Question 29

Disadvantages of market segmentation?

Answer 29

- could exclude customers by taking segmentation too far - could lose sales due to segmentation - Difficult to categories consumers these days

Question 30

Definition of market share

Answer 30

This is the proportion of the total sales in your market that you have

Question 31

What are the different ways Market share can be measured?

Answer 31

- Sales volume - Sales value - Number of customers a business has - Number of retail outlets a business has

Question 32

Formula for calculating market share

Answer 32

Your share X100 —————— Market in total

Question 33

What does the calculation of market share Allow a business to assess?

Answer 33

- It success both in comparison with it competitors and with past performance.

Question 34

to be able to use the calculation of market share in a sensible way what does the business need to be able to do?

Answer 34

Identify accurately which market it is in and who and what is it competition

Question 35

Market growth

Answer 35

- Business should know what is happening to their market - Market growth will have an impact on sales and the success of the business - If the market is growing, then a business would expect their share to grow

Question 36

What are factors that may affect market growth?

Answer 36

- Nature of the product - Changes in fashion and tastes - Population changes - Standard of living

Question 37

Factors affecting buyer behaviour

Answer 37

- To understand market growth, a business needs to know how buyers behave - Income - Standard of living - Employment As these improve customers are likely to increase their spending in most areas - Consumer confidence Lack of confidence will reduce spending particularly or non-necessities - Advertising or public campaigns Bad publicity for business buyers - Layout of stores - Fashion and trends