Market research: methods, sampling and data

Last time

Before we start: last time, in Motivation theories and methods, you learned these points. Here they are again on one card. Keep them in mind, because today builds on them.

Evidence for marketing decisions

Before launching a product or changing a price, businesses need evidence about customers and competitors. Market research provides it. This lesson covers primary and secondary research, sampling, quantitative and qualitative data, and the reliability of results.

Why research?

To reduce the risk of decisions: understanding demand, customer needs and competitors. To forecast sales, set prices, and test new products before launch. But research costs time and money, and cannot remove all risk.

Primary research

Primary research collects new data for a specific purpose: surveys, interviews, focus groups, observation and test marketing. It is specific and up to date, and competitors do not have it. But it is expensive and slow, and depends on a good sample.

Secondary research

Secondary research uses existing data: government statistics, market reports, competitors' accounts, and internal records. It is cheap and quick, and useful for an overview. But it may be out of date, not specific, and available to competitors.

Sampling

A sample should represent the target market. Larger samples are more reliable but cost more. Methods: random, stratified, quota, cluster and convenience sampling. Sampling error and bias reduce the reliability of results.

Quantitative and qualitative data

Quantitative data is numerical: how many, how often. It is easy to analyse statistically. Qualitative data is about opinions, feelings and reasons, from focus groups and in-depth interviews. Qualitative data gives depth, but is hard to generalise, can be subjective, and small samples may not represent the market.

Reliability of research

Results may be unreliable because of small or biased samples, leading questions, or respondents not telling the truth. Markets change, so research can quickly become out of date. Managers should combine research with experience and judgement.

Primary or secondary?

The two types of research compared.

Using qualitative data

Qualitative data helps understand why customers behave as they do, useful for product design and advertising. But one limitation: it may not represent the wider market, so decisions based on it alone are risky. So combine it with quantitative data.

Mistakes that lose marks

Mistake one: calling a survey secondary research. Mistake two: saying research removes all risk. Mistake three: a limitation not linked to the business in the case. The fix: correct classification, realistic claims, and the case.

The full-marks tip

The full-marks tip: for each method, give a benefit and a limitation for the business in the case. Judge reliability by sample, method and how up to date the data is.

On one card

So, on one card: market research. Keep it for revision.