It is necessary to gain information, data & knowledge about the market because it helps:

• Estimate the number of buyers
• Decide which features to put in the product
• Determine price
• Choose a venue to sell at
• Estimate competition
• Decide promotion strategies
• Identify the customer needs
• Stay competitive in the future

Types of Information

• Quantitative Information
• Qualitative Information (opinion/ judgment)

Primary Research/Field Research

• The collection and collation of original data via direct contact with potential or existing customers
• It is always first hand
• Expensive
• Carried out for a specific purpose
• Accurate
• All types of surveys

Process of Primary Research

1. Define purpose
2. Decide most suitable method
3. Decide size and audience
4. Carry out research
5. Collate data and analyze results
6. Produce report

Types of Primary Research

1. Questionnaires:

• A set of questions to be answered as a means of collecting data
• Provides detailed qualitative information
• Customer’s opinion is obtained
• but
• Answers may be misleading if the questions are not attempted well
• Requires a lot of time and money

• Make sure to know how to ask and collate
• Create a grid to gather the information
• Practice before conducting the final questionnaire
• Reassure respondents that their information will be kept anonymous

2. Interview:

• Interviewer provides further explanation of questions
• Detailed information can be gathered
• In an interview, don’t ask direct questions as to not force the interviewee to answer a certain way
• They can be carried out by one person or done in groups
• but
• Interviewer bias may occur
• Requires a lot of time and money
• It is less expensive to ask a group of people but the answers of each person may be affected by that of others

• In both of the above types of research, a sample may be collected which could either be a:
  Random Sample: people are selected at a random as a source of information
  Quota Sample: people are selected on the basis of certain characteristics

  3. Consumer Panels:

• Groups of people who agree to provide information about a specific product or general spending patterns over a period of time
• Often used to test new products
• Provide detailed information about opinions
• but
• Time consuming
• Expensive
• Biased

  4. Observation:

• Recording
• Watching
• Audits
• Inexpensive method
• but
• Only gives basic figures
• Does not provide reasoning behind decisions

  5. Experimentation:

• Samples of products are given out to customers
• Easy to set up
• Can gather consumers’ first reactions to products
• Representative sample of consumers must be asked
• but
• People may not give their true opinion to not cause offence
• Other potential customers may not be asked

Conclusion

• The research method chosen depends largely on the type of product or service in question

Secondary Research/Desk Research

• Information that has already been collected and is available for use by others
• Borrowed statistics & information
• Internal Sources:
  Readily available
  Cheap
  Grapevine included
  Firm’s own records
  E.g. all departments

• External Sources:
  Obtained from outside the company
  Sources are varied
  More general
  Have limitations
  E.g. government, newspaper

• Market research agencies’ reports are the most accurate even though they are expensive
• Not always too accurate
• Easier
• Less time consuming
• Covers total size of market

Accuracy

• Depends largely on how carefully the sample was drawn up and the way in which the questions were structured to ensure honest responses
• Quota samples are easier and more accurate
• The size of the sample is also important and the larger the sample gets, the more accurate and expensive it gets
• Trying the questions on a small group before using a large sample can help them revise the questions and make them better
• Bias may occur
• Statistics can quickly become out of date and no longer relating to current trends and instead reflecting what they used to spend their money on
• Both sources should be used with care and should not be assumed accurate straight away