Understanding Market Research: Types and Methods
Understanding Market Research
Market research helps businesses understand consumer needs before developing and producing a product. Examples include primary and secondary research.
Quantitative Data
Quantitative data provides information about the quantity of something. For example, how many customers buy cola?
Qualitative Data
Qualitative data provides information about opinions or judgments. For example, why do customers like cola?
Sampling Methods
Sampling methods are used to select a representative group from a larger population for research purposes.
Random Sample
In a random sample, every member of the population has an equal chance of being selected (e.g., for a questionnaire or interview). People are selected at random, for example, every 1000th person in the telephone directory.
Quota Sample
In a quota sample, people are selected based on certain characteristics, such as age, gender, or income. For example, a certain number of people are selected for an interview or to answer a questionnaire, ensuring half are male and half are female.
Primary Research
Primary research involves gathering original data, which may require direct contact with customers. Methods include:
- Questionnaires: Asking people questions. It’s important to carefully decide what questions to ask, as poorly worded questions can mislead people.
- Interviews: Face-to-face conversations with customers where the interviewer has a set of prepared questions.
- Samples: A group of people chosen to participate in market research.
Types of Samples
- Random Sample: A random number of people are selected.
- Quota Sample: People are selected based on specific characteristics.
- Consumer Panels: Groups of people who agree to provide information and spending patterns about a product. They may even test it and give feedback on likes and dislikes.
- Observation: Involves recording, watching, and auditing.
Observation Techniques
- Recording: E.g., meters can be fitted to a monitor to see what people are watching.
- Watching: E.g., observing how many people enter a shop and make a purchase.
- Audits: E.g., counting inventory to see what has sold well (inspecting).
- Experimenting: Involves giving products to consumers to gather their feedback.
Secondary Research
Secondary research involves using information that has already been collected by others.
Internal Sources of Information
Data collected from past research can be reused if needed. Examples include:
- Sales Department: Sales records, pricing data, customer records.
- Distribution and PR Personnel
- Finance Department
- Customer Service Department
External Sources of Information
Data collected from sources outside the business. While useful, it may have limitations as it was gathered for other purposes. Sources include:
- Internet: Provides various information, but it must be validated.
- Trade and Employer Associations: Provide information about industries.
- Specialist Journals
- Research Reports
- Newspapers: Provide information about the economy and disposable income.
- Government Reports and Statistics: Contain data such as age groups and culture.
- Media Reports
- Market Research Agencies’ Reports: Detailed reports on the economy, but can be expensive.
Secondary research is often a cheaper way to obtain information and provides access to data that cannot be gathered through primary research, such as government issues or economic data.