The purpose and methods of market research

Question 1

What information would businesses want when they undertake market research?

Answer 1

Demand - the size and growth of the market and the different segments that exist within the overall market
Market share - sales of each producer
Competition - the number and size of competitors
Target market - a business is unlikely to want to target everyone, instead focussing on particular groups

Question 2

What types of data does research give a business?

Answer 2

Quantitative and Qualitative

Question 3

What is Quantitative mean?

Answer 3

Quantitative data involves the use of numbers such as the size of the market and qualitative involves views and opinions such as getting information on why people do things.

Question 4

How could I calculate the value of sales in a market?

Answer 4

Value of sales = number of units sold * price per unit

Question 5

What is the formula for market growth?

Answer 5

Market growth = change in market size/original market size * 100

Question 6

How is market share calculated?

Answer 6

Market share = sales of the product/total market sales * 100

Question 7

How does market research help a business?

Answer 7

• Identify opportunities in markets - is there demand for a new flavour of a company’s drink?
• Weigh up different possible actions - is it best to promote the product launch online or in print?
• Assess the effectiveness of actions that have been taken - how successful was the price promotion that the business ran last week?

Question 8

What are the two methods that a business can use to gather data?

Answer 8

Primary and secondary research

Question 9

What is primary research?

Answer 9

Primary research uses data gathered for the first time like a survey.

Question 10

What does secondary research mean?

Answer 10

Secondary data uses data that has been gathered already such as internet research.

Question 11

How is primary data gathered?

Answer 11

• Observing - see what attracts people’s attention
• Experimenting - trying something and measuring the response
• Surveying - interviewing people to understand their motives

Question 12

What are the different types of surveys businesses could do?

Answer 12

• telephone
• questionnaires
• customer/suppliers feedback
• focus groups
• internet research
• printed press