Market research THE TIMES 100

Market research Market research is the process of gathering and interpreting data about customers and competitors within a firm’s target market.

Purpose of market research Market research is carried out to: Help firms make marketing decisions Reduce risk Data may be gathered for different reasons e.g. to identify current and future needs of consumers, the price customers will pay for a product or the success of a promotional campaign.

Primary research Primary research involves finding out new, first-hand information. This is called primary data. Methods of primary research include: Questionnaires Focus groups Observation Questionnaires may be face-to-face, telephone or written. Focus groups allow for more qualitative data to be collected and follow up questions can be posed to gain a greater understanding of opinions and feelings. ICT is increasing being used in market research. Data is gathered using online questionnaires and loyalty card schemes. Observation can be carried out using CCTV.

Primary research Benefits Drawbacks Directly relevant to the business Up-to-date data obtained Competitors do not have access to the findings Time consuming Often expensive Results may be misleading if the sample size is too small, questions are unclear or there is interviewer bias Bias may occur if questions are written or posed in a way that leads the respondent into answering in a particular way.

Secondary research Secondary research involves gathering existing information. This is called secondary data. Sources of secondary data include: Market research reports Trade journals Government statistics Sales and customer records

Secondary research Benefits Drawbacks Often quick and easy to collect A wide range of secondary data is available, especially on the internet Data may not be reliable or up-to-date May not be totally relevant May not be in a form that is easily interpreted and analysed

Quantitative research Quantitative market research involves finding numerical data Quantitative data is generally collected from large samples and is easy to analyse Methods of collecting quantitative data include written and online questionnaires

Qualitative research Qualitative research involves finding out opinions, attitudes and feelings Often more useful than quantitative data but is more difficult to collect and analyse Methods of collecting qualitative data include focus groups & in-depth interviews

Sampling Sampling is the method of choosing a smaller, representative group of respondents with which to conduct research instead of the whole population. Sampling reduces the cost and time to carry out research. Careful sampling can provide reliable data about the population. The alternative to sampling is to conduct a census whereby the whole population is questioned.

Sampling methods Random sampling Everyone in the population has an equal chance of being chosen to be in the sample. Quota sampling People in the sample are chosen to reflect the proportions of different groups in the target market e.g. 80% over 60s, 20% under 60s when researching the market for mobility aids. Stratified sampling The appropriate market segment is first selected, for example, married men, then the sample is randomly selected from this segment. Random sampling – it is difficult to get a completely random sample, for example, there may be geographical considerations when carrying out a survey in one area. An accurate list of the population would be needed to carry out random sampling successfully. Computer programmes can be used to create random samples. Quota sampling – the most common variables in quota sampling are gender, age, income and location. Since quota sampling is not random, there is the possibility of bias within the research.

Sampling methods Cluster sampling This uses random sampling from a specific area or cluster e.g. tourist towns when researching leisure hotels. Convenience sampling This simply means using a sample of willing volunteers. This method often results in bias and may only produce small samples. Systematic sampling Every nth person is selected from a list of the population. This can be costly if the sample is widespread. Cluster sampling can prove costly if the clusters are large. Results of this type of sampling are unlikely to representative of the rest of the population. Although easy to conduct and provides information quickly, convenience sampling is unlikely to find views representative of the whole population. In systematic sampling, n would be the population size divided by the sample size.

Reliability of sampling The larger the sample size, the more reliable it is likely to be. However, larger samples incur greater costs. A 95% confidence level is usually expected when conducting research. This means that findings are likely to be correct 19 times out of 20.

Market research in context

Market research at Barclays Barclays carried out market research to help it to improve its student account. What do you think was the purpose of this market research? The purpose of the market research was to understand the student market in order to discover their needs regarding bank accounts and how these needs could best be met by Barclays. This helped decision making when improving the account.

Types of market research used by Barclays Barclays used both primary and secondary methods to research the student market. Draw up a table of the primary and secondary methods that Barclays used. Use the Barclays case study to help you. Primary methods: An external agency carried out an opinion panel in the form of an online questionnaire Testing of the proposed account was carried out with 100 new and existing Barclays student account holders, through in-branch and online questionnaires Secondary methods: Barclays own sales figures and that of its competitors were analysed to discover how many of the new accounts opened in 2009 were student accounts

Use the case study to help with this Collecting data Devise a questionnaire that could be used with students who have opened one of Barclays new student accounts to find out what they think of it. Use the case study to help with this NB Closed questions will produce quantitative data and will be easier to analyse; open questions are more difficult to analyse but are more likely to elicit qualitative data.

Sampling Which sampling method/s would be most appropriate for Barclays when researching the student market? A stratified sampling method may be most appropriate – a random sample taken from the ‘student’ segment of the market.

Useful resources Market research lesson suggestions and activities (The Times 100) Barclays case study (The Times 100) Barclays website