Understanding the Consumer & Competition

Types of market research

Businesses are market driven, thus consumer opinion is important.

MR can give a business a competitive advantage and help reduce the risk of starting up.

MR can either be QUANTITATIVE research or QUALITATIVE research

QUANTITATIVE research – measurable data which can be analysed and trends deduced. E.g. How much would you be willing to pay for the latest iPhone?

QUALITATIVE research – immeasurable data which is subjective and hard to deduce trends from due to the open nature of the information

2 types – primary (field) and secondary (desk) research

  • Primary research – Information which does not already exist and is collected through the use of field research by making direct contact with consumers/potential consumers.

  • Examples – questionnaires, interviews, observations, product trials/test marketing, consumer panels

  • Secondary research – Information which is already in existence, from within the business (INTERNAL) or from other sources (EXTERNAL).

  • Internal = Existing data from different departments (marketing, sales, etc). Customer feedback forms

  • External = market research organisations (e.g. Mintel), Gov data/census, newspapers/magazines, the internet/trade journals,

  • Classic exam mistake – primary = DIY and secondary = other people. WRONG, WRONG, WRONG! Primary = new info and secondary = existing info (it can be YOUR existing info or someone else’s!).

What is the key advantage of primary research over secondary in terms of the type of information gathered for your organisation?

Market orientated (MO) versus product orientated (PO) research

“A lot of times, people don’t know what they want until you show it to them” (Steve Jobs).

Which is the better approach to launching a new product:

1) Doing your ‘homework’ via lots of market research and creating a MARKET ORIENTATED product

2) Spending your resources on product development and launching an excellently made product, which you think the market desires. This is a PRODUCT ORIENTATED approach.

Market segmentation

Market segmentation: dividing a market into groups of consumers who have similar needs (and similar traits and similar behaviours).

  • Differences in customers and their buying habits create __different groups __of customer types.

  • Customers are divided into smaller groups, called Market Segments.

  • Many segments can exist within a market.

  • Different marketing strategy for each market segment.

  • For example, chocolates are eaten by young children, teenagers and adults of both sexes. Different brands of chocolates will appear to different groups of people – market segmentation in action!

  • The promotion department advertise towards their target market – they know the correct type, location and medium of promotion that the target market are most likely to appreciate.

How can a business divide its market into different segments?  What criteria might it use? E.g. Age…
Your answer should include: Income / Religion / Ethnicity / Gender / Lifestyle
What is the key benefit to marketing with segmentation?

Using technology to support research

ICT is an essential part of MR – the internet is at the core of any secondary research. The problem is narrowing the research down to get helpful results. ICT can also help with primary research in the form of online surveys and questionnaires. Furthermore, social media platforms such as Facebook and Twitter provide businesses with a valuable customer service opportunity as well as enabling hyper-targeted marketing (as we have discussed during our last lesson). The risk here is that the sample of people responding might not be representative (there is a generation who mostly are not ‘tech savy’!) so bias will be present.

ICT can also be used in exploring customer databases – essential secondary research. E.g. Amazon holds a record of your every purchase – this is a vast quantity of data on their customers. From this they can analyse buying patterns and trends on a national and individual level. This how they tailor their marketing specifically to individuals and small groups with shared interests – have you ever noticed how their e-mails to you are reflective of your buying habits!? Supermarkets use loyalty cards in a similar fashion.

Businesses often supplement their own customer data with data from other sources, such as electoral roll, Land Registry, the Office for National Statistics and credit reports. Understanding demographics of general population provides useful information when making large operational decisions such as deciding on new products, advertising and business location.


A key part of primary research – questioning a selection, or ‘sample’ of people.

It’s impossible to interview everybody in a particular market and so a smaller ‘sample’ is chosen as being representative of the market as a whole. Risks??

As it’s impossible to survey everyone. sampling saves time and money!!

  • RANDOM SAMPLE – choose people randomly, e.g. every 5th person that walks past, irrespective of age/social class etc.

  • QUOTA SAMPLE – people selected on basis of certain characteristics (e.g. age, gender or income). E.g. Apple during the iPad 2 market research might interview 20 people from 10-25, 30 from 26-45 and 20 from 46-60 (their target market is 26-45 year olds).

  • STRATIFIED SAMPLING – targeting one particular segment of the market that you want to find out about. E.g. a baby food co. might only interview mothers between the ages of 16 and 30.