- Market research is the collection of data that will be of use to the company. This data is often about the company's customers but could also be about competitors' products or the whole market.
- Market research can be carried out by the collection of primary and secondary data. Primary research is when the company collects its own data; for example a survey. Secondary research is using data which has already been collected such as a book of statistics. Secondary research is often much cheaper than primary research but primary research has the advantage that it can be tailored directly to the firm's requirements.
- Two main types of data are collected by market research; these are quantitative and qualitative. Quantitative is generally numerical data such as statistics whereas qualitative data is people's ideas and opinions. Qualitative research is often used to investigate reasons why people buy a certain product. Group discussions (also known as focus groups) are the main way of collecting qualitative data whereas quantitative data is collected in simple questionnaires / surveys.
- It would be impossible for a company to ask every single person in a specific market or even all of its customers so instead a sample is chosen. The purpose of a sample is to represent a large group of people with a smaller group of people, there are many advantages of using a sample: Saves time, labour and money.
Below are the types of samples:
- Random: Everyone has an equal chance of being picked.
- Systematic: Every Nth person within a group is chosen.
- Cluster: People are chosen from a specific area.
- Quota: Sample is selected on the basis of the characteristics of customer profile.
- Stratified: Choosing people from a specific group in the population.
It is important with sampling that enough people are chosen to give confidence in the result. A sample size can be as low as 100 but obviously the more people asked, the more accurate the result obtained is.
Errors that may occur due to incorrect sampling may be caused by using the wrong type of sample or out of date statistics. Other errors may be due to questionnaire design or data analysis.
It is important that a questionnaire is carefully thought about and designed properly to obtain accurate data. Below are some rules for creating questionnaires:
- Clarify the purpose of the enquiry.
- The questions should be clear and easy to understand.
- Avoid leading questions.
- The questionnaire should follow a sequence and have a clear structure.
- Avoid questions which people may not wish to answer or tax memory.
- Include some control questions.
Once data has been collected, it can be presented in graphical form to make patterns more viable. E.g. graphs, pictograms, scattergrams, pie charts etc