REVISED GCSE FACT FILES Business Start Up For first teaching from September 2009 For first award in Summer Market Research

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1 REVISED GCSE FACT FILES Business Start Up For first teaching from September 2009 For first award in Summer 2011 Market Research

2 Market Research Learning Outcomes At the end of this unit students should be able to: demonstrate an understanding of the different methods of market research and sampling as well as the most appropriate method for particular circumstances; explain market segmentation; and interpret, analyse and evaluate the results of market Setting the Scene Belleek China move into the crystal market The County Fermanagh firm Belleek China is to move into the crystal market. The company is set to invest about 1.5m in the venture following extensive market research. However, managing director John Maguire said it would not be able to manufacture locally. It will be based in the Czech Republic. The move would enable the firm to further penetrate the UK wedding gift market which is estimated to be worth over 300m annually, he said. Traditionally, the name Belleek has been synonymous with china and while going forward the manufacture of china will remain to be our core business, we see tremendous opportunities for further extending our Belleek Living brand with complementary product ranges. Market research Market research is the process whereby firms such as Belleek attempt to discover what consumers require from a good or service so that they can meet those requirements. For example if a firm is developing a new product or service they will generally carry out some form of market research before actually making the product to ensure that it is something that consumers would be willing to buy. Types of market research Market research generally involves some form of data collection and can be classified as either primary research or secondary Primary research (also known as field research) involves the collection of original data for a specific purpose and is normally collected directly from the source. Examples of primary research include surveys, focus groups, consumer panels and interviews. Advantages of primary research Because the research is original, the results gathered will generally be more relevant to the needs of the business which commissioned the Since primary research involves the collection of new information for a specific purpose the data should be more accurate and up to date.

3 Disadvantages of primary research Primary research often takes a long time to plan and carry out effectively. This can be a particular problem in fast changing markets where firms need accurate information quickly. Primary research generally requires a great deal of marketer involvement and therefore can be very expensive to carry out. Secondary research (also known as desk research) involves the processing of data that has already been collected. To collect secondary data, market researchers will consult previously published material such as government reports, press articles or previous market research projects. Market research methods There are a number of different research methods that companies such a Belleek can use to obtain the information they require. The most common of these is considered below: 1. Surveys One way to find out what consumers require from a product is to simply ask them! This is normally done using a questionnaire, in which each respondent is asked a number of questions relating to a product or market. These surveys can be carried out via , the internet, the telephone, by post or face-to-face. 2. Focus groups Advantages of secondary research Secondary research is often quicker to complete than primary In recent years the development of the internet has made accessing secondary data much simpler. Secondary research is much cheaper than field research, since the data used in secondary research has been collected already for some other purpose. Disadvantages of secondary research The main disadvantage of secondary research is that previous studies may not have targeted the exact issue that the current research requires and therefore the data may be of limited use. Secondly, even when the secondary data is relevant to the current study it may be out of date and therefore the results achieved may be inaccurate. One further problem associated with secondary data is that the data may be biased as it has been collected by some other group. It is important when using secondary data that this potential bias in the data is considered. A focus group is a form of research in which a group of individuals are asked to share their thoughts, attitudes and feeling on a particular product or concept. Focus groups normally contain between 6 and 10 people who are typically screened to ensure that they form part of the relevant market segment. 3. Interviews An interview is similar to a face to face survey in that each respondent meets with an interviewer and is asked a set of questions. The interview differs however in that respondents are normally selected on the basis of meeting predetermined criteria. 4. Test marketing Test marketing is the process of trialling a new product, service or concept on a section of the market prior to a full scale roll out. The products are generally trialled in a particular geographical area or TV region and are often supported by a full advertising and marketing campaign to gauge consumer reaction before the product is launched nationally.

4 C&C to trial lower-strength version of Magners in 550 UK Tesco stores Magners/Bulmers manufacturer C&C has confirmed it is currently trialling a lower-strength version of Bulmers in Munster and plans to test a Magners product with 2.3pc alcohol content in Britain called Magners Mid Strength. While C&C would not give details on pricing or UK trials, the morningadvertiser.co.uk website said the cider will be packaged in a pint bottle with a green neck foil and green front and back labels and will retail at 1.99 per bottle. It will be trialed in 550 UK Tesco stores from next month. Magners marketing manager Scott Fairbairn told the website: This is the first time that a major brand has introduced a low-abv offering to the cider market in the UK and we are convinced that this will unlock a whole new range of occasions where Magners can be enjoyed. If the trial is successful C&C will launch Magners Mid Strength to the whole UK market in (Source: Adapted from the Belfast Telegraph 20th August 2008) Sampling Case Study In an ideal world a business would like to know as much as possible about the tastes and preferences of all its potential customers, however due to the time and cost involved in collecting this information, firms often use a representative sample. For example if a T.V company wanted to know the views of teenagers on a particular programme they could select a sample of 500 or so and ask them, rather than trying to ask every single teenager in the UK. There are two different sampling methods a firm can use to select its actual sample: (a) Random sampling Also known as probability sampling, random sampling involves selecting a sample through chance either via a lottery system or a system of random number selection. For example if a firm is using a telephone survey it can select its respondents through the use of a programme which selects numbers at random, or via a system which chooses actual phone numbers at random from a telephone directory. (b) Quota sampling In quota sampling researchers are given a certain quota of subjects of a specified type to recruit for the research project. For example a researcher may be asked to gauge the opinions of 20 males and 20 females from three separate ethnic or socioeconomic groups. The researcher is free to select these subjects in whatever manner he or she prefers. Case Study Pupils used for market research A growing number of schools are allowing market researchers to canvass their pupils. Head teachers are asking pupils to answer questions on products ranging from fast food and soft drinks to clothes. Schools are paid about 1 per pupil for taking part, but there is concern that the children are being exploited. As many as 20,000 pupils in schools and even playgroups regularly take part in surveys by telephone or face-to-face, so advertisers can find out what boosts their products pester power. Stephen Colegrave, of Saatchi and Saatchi, said: Children are much easier to reach by advertising. They like advertising, and pick up on it really fast, and quite often we can exploit that relationship, and get them actually pestering their parents for the product. The Youth Research Group is one company which uses the internet to survey children in the classroom. It offers clients an instant verdict on new products. In return for access to their pupils, the schools get free computer equipment. (Source: BBC News Nov 3rd 1999) 1. Explain what is meant by the term market 2. The case study refers to the use of surveys. Explain three alternative forms of market research that could be used. 3. With reference to the case study, explain the difference between random and quota sampling. 4. Explain why some people might be concerned about companies using children to carry out market

5 Key Terms Knowledge review Market research refers to the collection and analysis of information on a particular product or market. Primary research (also known as field research) involves the collection of original data for a specific purpose and is normally collected directly from the source. Secondary research (also known as desk research) involves the processing of data that has already been collected by some other person or organisation. Test marketing is the process of trialling a new product on a section of the market prior to a full scale roll out. A focus group is a form of qualitative research in which a group of individuals are asked to share their thoughts, attitudes and feeling on a particular product or concept. Sampling is the process of selecting a representative group from a larger population. Sampling methods include random and quota. Revision questions 1. Explain the difference between primary and secondary 2. Explain 2 advantages of primary 3. Explain 2 advantages of secondary 4. Explain how a company such as Belleek could use test marketing. 5. Explain the difference between random and quota sampling.