Understanding Markets And Customers Flashcards
What is primary market research
Collects and analyses data for the first time to use for marketing purposes.
What is secondary market research
Collects and analyses data that already exists for marketing purposes.
Advantages of primary research
- Directly focused to research objectives.
- Kept private- not publicly available.
- More detailed insights- particularly into customer views.
Disadvantages of primary research
- Time consuming and costly to obtain.
- Risk of survey bias.
- Sampling may not be representative.
Advantages of secondary research
- Often free and easy to obtain.
- Good source of market insights.
- Quick to access and use.
Disadvantages of secondary research
- Can quickly become out of date.
- Not tailored to business needs.
- Specialist reports often quite expensive.
What is quantitative data
This provides data in a numerical form.
What is qualitative data
This is data that is not in a numerical form and is often descriptive.
Advantages of quantitative data
- Data relatively was to analyse.
- Numerical data provides insights into relevant trends.
- Can be compared with data from other sources.
Disadvantages of quantitative data
- Focuses on data rather than explaining why things happen.
- Doesn’t explain the reasons behind numerical trends.
- May lack reliability if sample size and method is not valid.
Advantages of qualitative data
- Essential for important new product development and launches.
- Focused on understanding customer needs, wants and expectations which provide very useful insights for a business.
- Can highlight issues that need addressing.
- Effective way of testing elements of the marketing mix.
Disadvantages of qualitative data
- Expensive to collect and analyse so requires specialist skills research.
- Based around opinions which is always a risk that sample is not representative.
What is a sample
A group of people or items selected to represent the target population.
Benefits of sampling
- Even a relatively small sample size can provide useful research insights.
- Using sampling before making marketing decisions can reduce risks and costs.
- Sampling is flexible and relatively quick.
Disadvantages of sampling
- Biggest risk is the sample is unrepresentative of population which leads to incorrect conclusions.
- Risk of bias in research questions.
- Less useful in market segments where customer tastes and preferences are changing frequently.
What is extrapolation
Involves the use of trends established by historical data to make predictions about future values.
Advantages of extrapolation
- A simple method of forecasting.
- Not much data required.
- Quick and cheap.
Disadvantages of extrapolation
- Unreliable if there are significant fluctuations in historical data.
- Assumes past trend will continue into the future which is unlikely in many competitive business environments.
- Ignores qualitative factors.
What is correlation
A method of sales forecasting that looks at the strength of a relationship between two variables.
What is positive correlation
A positive relationship exists where the independent variable increases in value, so does the dependent variable.
What is negative correlation
A negative relationship exists where the independent variable increases in value, the dependent variable falls in value.
What is no correlation
There is no discernible relationship between the independent and dependent variable.
What is confidence intervals
The percentage probability that an estimated range of possible values in fact includes the actual value being estimated.
Why is confidence intervals a useful predictive data tool
- Businesses benefit from the use of statistics in estimating or predicting future events.
- A confidence interval helps a business evaluate the reliability of a particular estimate.
- As no estimate can be 100% reliable, businesses need to know how confident they should be in their estimates and whether or not to act on them.
