Understanding markets and customers

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What is market research used for?
Identify potential demand, investigate the degree of the nature of competition, identify trends, and to aid decisions on aspects of the marketing mix.
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Name the types of market research
Primary, Secondary, Quantitative, Qualitative
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Define and evaluate primary market research
Collection of first hand data for the specific needs of the initial user. It is up to date + specific to the firms needs. But it could potentially be bias and it takes money + time.
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Define and evaluate secondary market research
Information that has already been collected for a different purpose. It is cheap and saves time, however it may be generic and out of date.
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Define and evaluate qualitative market research
Information about markets based on subjective factors such as opinions+reasons. Provides a greater insight into reasons of consumer behaviour, can act upon info collected. But, it is expensive, time consuming, difficult to summarise+analyse.
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Define and evaluate quantitative market research
Information about the market based on statistical factors. Its easy to summarise+analyse, easy to compare and able to identify trends. But, it doesnt explain why people behave in a certain way, and the accuracy of the results is questionable.
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Define market mapping
A technique that analyses markets by looking at the features that distinguish different products or firms. It is useful as they show the position of each product in relation to the market being studied.
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Benefits of market mapping?
Help you identify similar firms/closest rivals, identify a gap in the market, can help a business to alter its brand image/reposition itself.
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Drawbacks of market mapping?
Can oversimplify if a business sells a range of products, depends on the quality of the data is based upon, and gaps in the market may actually reflect a lack of interest and demand in these products from consumers.
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Define sampling
Gathering data from a group of respondents who's views or behaviours should be representative of the target market as a whole.
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State and define methods of sampling`
Random-A sample is selected for a study where each individual is chosen entirely by chance. Quota-The sample chosen reflects the characteristics of the market. Stratified-The sample selected is randomly chosen for specific subsection of the populatio
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What are the factors influencing the choice of sampling methods
Target market, availability of resources, attitude to risk, and current understanding.
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Strengths of sampling
Can provide good indication of the likely behaviour of the whole market, can be used flexibly, can avoid expensive marketing errors, enables them to learn more about its market, + reliable info can be gathered from a fairly small cross-section.
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Weaknesses of sampling
May be unrepresentative, there may be bias in questions or in the answers that they encourage, it may be difficult to locate suitable respondents, opinions registered can become out of date within markets that the test changes constantly.
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Define confidence intervals
The + or - used to show the accuracy of statistical results arising from sampling. Used to access the reliability of sampled data when trying to forecasts figures such as sales levels.
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Factors influencing the confidence interval
Sample size, population size, % of sample choosing a particular answer.
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Define correlation
Used to establish the strength of the relationship between two sets of values. Either + or - correlation. Can be shown through a scatter diagram, or scatter graph.
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Define casual links in correlation
A link between 2 sets of info or types of behaviour. Once a casual link is discovered, correlation can be useful to identify the extent of the link.
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Define extrapolation
Using previous patters of numerical data in order to predict values in the future. Can be carried out visually or by calculation, although the later method is recommend for greater accuracy.
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Strengths of extrapolation
Quite common for past trends to continue, businesses will often target a rate of steady growth+there effort are focused on future figures, products experiencing sales growth steadily build up a larger base of customers.
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Weaknesses of extrapolation
Less reliable if theres fluctuations, ignores qualitative factors, it ignores the PLC, does not take into account the business environment that will influence sales.
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3 ways of interpreting marketing data
Correlation, extrapolation, confidence intervals.
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Whats the value of information technology in analysing data for marketing decision making?
Computer software can complete quantitative forecasting calculations, firms are able to link their sale records to other databases so that changes in trends can be detected quickly, firms can use loyalty cards, can looks at own financial figures.
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Define price elasticity of demand (PED)
A measure of how responsive consumers are to a change in price.
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Equation of PED
% change in quantity demanded / % change in price.
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Define price elastic demand
If the change in price leads to a greater % change in the quantity demand than the % change in price, it indicates that demand is relatively responsive to change in price.
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Define price inelastic demand
If the change in price leads to a smaller % change in the quantity demanded than the % change in price, this indicates that demand is relatively unresponsive to a change in price.
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Define unit (unitary) elasticity
The name is given to the situation where both % changes are the same, given an answer of (-) 1.
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Effect of PED on inelastic products
When its price rises the quantity demanded falls by a smaller %. Therefore, the impact of the price outweighs the relatively small % change in demand. Resulting in sales revenue increasing.
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Effect of PED on elastic products
When its price rises the quantity demanded falls by a larger %. Therefore, the impact of price increases will be outweighed by the relatively large % change in demand. Resulting in a decrease in sales revenue.
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Effect of PED on unitary elasticity
Sales revenue will be the same whether price rises or falls.
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State the factors influencing the PED
Necessity (if it is an essential product), Habit, Availability of substitutes, Brand loyalty, Time (how long it takes to find alternatives), Consumer income, Proportion of income spent on a product (if the product takes up a small % of their income).
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Define income elasticity of demand
Indicates how demand will be affected by changes in income. For luxury products the IED will be greater than 1. For necessities the elasticity will be less than 1 but more than 0.
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Equation of IED
% change in quantity demand / % change in income
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Limitations of price and income elasticity of demand?
Can be unreliable as its difficult to calculate, changes in price may provoke a reaction from rival firms who may try to match or change their marketing, may be difficult to use secondary market research to calculate elasticity.
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Card 2

Front

Name the types of market research

Back

Primary, Secondary, Quantitative, Qualitative

Card 3

Front

Define and evaluate primary market research

Back

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Card 4

Front

Define and evaluate secondary market research

Back

Preview of the front of card 4

Card 5

Front

Define and evaluate qualitative market research

Back

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