Understanding markets and customers

  • Created by: Howzat
  • Created on: 28-09-18 10:57

Market Research

Market Research is the collection and analysis of data and information to inform a business about its market. 

Primary market research (field research) involves the collection of first hand data that did not exist before and therefore is original data. Interviews etc.

Secondary market research is research that has already been undertaken by another organisation and therefore already exists. Browsers, books, letters etc. 

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Market Mapping

A market map is a diagrammatic technique that enables businesses to display the perceptions of customers.

Compares variables regarding products and consumers. 

Analyse consumer buying habits and preferences

Compare price of a good with the quality

Used to identify what segment of the market of the market is underprovided for and look at producing a product to fill that gap. 

Typically, products are compared between all competitors within a market. 

Gives a firm real insight into the competition within the same market as its own product. 

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Value of sampling

Businesses cannot ask for the opinions of all potential customers and therefore try to choose a representative sample. 

The value of sampling will depend upon:

  • The sample technique used
  • How the sample was carried out
  • The size of the sample 

The size of the sample will depend upon a number of factors including:

  • The budget available
  • The importance of accuracy
  • Degree of confidence in results. 

Ramdom sampling- A sample is selected for study from a population- Each individual is chosen entirely by chance.

Quota- Population is segmented into subgroups before a judgement is made. 

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Marketing data

Objectives of marketing data:

  • Inform decision making 
  • Devising strategy 
  • Understanding the market
  • Identify sales patterns 
  • Realistic target setting
  • Keeping up to date with market changes
  • Review of competitors actions 
  • Evaluation of past actions 
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Correlations in business

Postive- 

The 2 variables move in the same direction- e.g as temperature increases, the sale of ice creams increase. 

Negative- 

The 2 variables move in opposite directions- e.g as road tax prices go up the sales of new 4 x 4's goes down.

Zero- 

There is no relationship between the factors- e.g average rain fall and the sales of text books

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Confidence levels and intervals- accuracy of resul

Confidence levels reflect the degree of certainty with which a business believes a stated outcome will happen- e.g 90% confident that research findings are accurate and therefore 1 in 3 customers will buy that product. 

Can be affected by factors such as sampling technique, research method and expertise of the person carrying out and analysing the research (Evaluation point in exam).

Sampling will never give a 100% accurate picture of the whole population so therefore there will be sampling error. 

The likely size or significance of this sampling error determines the confidence interval. The confidence interval are parameters (boundaries) within which a confidence level applies. 

This means that the range of values within which the business is confident that the research results will be true- e.g 95% confident that customers will be ok to pay between £1.00 and £1.60. 

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Extrapolation- to extend

Using past data to extend an identified trend into the future.

A useful technique when trends can clearly be identified and the market is relatively stable.

However, the past is not always a good indication of the future. 

Conditions and trends can soon change- 

Competitors actions 

Consumer tastes 

Market conditions 

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The Value of technology- Usefulness

Gather and analyse large volumes of data quickly and accurately

Track and interpret consumer spending habits 

Collect consumer opinions from around the world

Encourage consumer feedback through social media and review sites.

Enable two way communication 

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