Article: No one knows better than Mom, right?

Source: John Koten “You aren’t paranoid if you feel someone eyes you constantly.”

Market research is the process of collecting and analyzing information about the customers you want to reach, called your target market.

This assists the firm to meet the goal of the marketing concept by helping to find out what customers want.

DefinitionDefinition

When is Market Research done

Before the product is made to find out what customers expect from this product

When is Market Research done

After the product is made to assess the effectiveness of its advertising and to evaluate the performance of the product

Aims of Market Research

1.To find out what the public wants so that they do not waste resources producing goods that are not required

2.To assess the likely level of demand so that overproduction does not take place

3.To discover what will influence customer behaviour or buying patterns

4.To find out what competitors are doing in the marketplace – advertising, promotion or developing new products

Market research answers the following questions:

Who might buy a product?

How did they find out about it?

Where did they buy it from?

Why do they buy it?

Factors that influence customer behaviour

(1) ChoiceWhere there are several competitors,

consumers will have alternatives to choose from. For example, in a food court, a hungry person can choose between Burger King, KFC, Subway and Pizza Hut.

(2) Taste People differ in their preference for goods

and services. The marketer has to identify those preferences.

Factors that influence customer behaviour

(3) TraditionSometimes tradition influences customer behaviour. The same products are

purchased over time maybe because their name has become known for good quality. (Lotus Flour advertisement)

(4) Income The amount of money a person earns affects his ability to purchase. For example, higher priced products will only be affordable to high-wage earners.

Factors that influence customer behaviour

(5) Brand loyaltyCustomers who are brand loyal would

tend to stay with their existing products because it has satisfied them for some time. It is difficult for marketers to change the minds of loyal customers.

(6) Price of Substitutes Substitutes are products that can be used in place of each other. For example, butter or margarine, tea or coffee. If a substitute product is cheaper, customers may tend to choose that instead.

Types of Market Research

Primary research involves collecting original data about the preferences, buying habits, opinions, and attitudes of current or prospective customers.

This is information that does not exist in any other form. It has not been collected before.

Types of Market Research

Secondary data involves studying existing information. This is information that has been gathered previously.

This is the most widely used form of market research.Using this approach, the researcher simply watches how people behave or respond to certain situations. Information is collected and analyzed to assist in decision-making.

These are based on carefully constructed questions to get the views of customers.Since it is impossible to survey each customer, a sample is used. This sample has to be representative of the entire population.

Note: A representative sample includes both sexes, a variety of age groups, people who live in rural and urban areas and people of different ethnic, religious and social backgrounds.

These are face-to-face meetings and may be time consuming and expensive. However, they provide greater detail and accuracy. Body language can also be noted.It can take the form of telephone interviews as well.

One common experiment that is done is called Test Marketing. This involves launching a product, idea or promotion in a small area, for example, a town before it is launched nationally. This is done to get customer reactions and to test if the new product or idea will be received favourably.

This is done within an organization, that is, a firm’s own records.It may include sales, accounting records, customer complaints or feedback from sales representatives.

This data is collected from outside the organization, that is, it has been published by someone else.

Governmen

ts

Newspapers

Banks

Magazin

es

Industry Publications

Statistical Offices

Advantages1.It can be specific and customized to find out exactly what the researcher needs to know2.This tiny sample can give an accurate representation of a particular market if chosen wisely3.When surveys are done face-to-face, there can be immediate response or feedback

Disadvantages1.It can be very time consuming to formulate questionnaires, send out to the public and analyze results2.It incurs a high cost to carry out experiments, surveys and other forms of primary research3.Sometimes the responses given does not correspond with individual behaviour

Advantages1.It is less expensive than primary research because it does not incur the cost of actually carrying out the research2.It is easy to access with the use of the Internet. It is convenient and accessible from many locations

Disadvantages1.It may not be accurate2.Samples may not have been selected to represent the entire population3.It may not be specific to every organization’s needs

PAST PAPER QUESTIONS

June 2004 Question 7

Mark Brown is planning to set up and entertainment park for children and adults on a site outside the capital of the country. He is presently conducing market research.

(a)What do you understand by the term ‘market research? (2 marks)

(b)List SIX different types of information Mark Brown should get before setting up the entertainment park. (6 marks)

PAST PAPER QUESTIONS

June 2004 Question 7

(c) State the importance of any THREE types of information listed in (b) above to the success of the business. (6 marks)

(d) Identify THREE sources from which Brown may obtain the required information. (6 marks)