Types of Market Research (SL IB Business Management)

Surveys

• The most widely used method of gathering primary research is to use sampling by using surveys
   
• This is where you would ask a series of questions to a certain number of people (respondents)
   
• The results from the ‘sample’ are used to make inferences in which the results of the sample are extrapolated to be true for the wider population
   
• A wide range of respondents can be reached using online survey tools such as Survey Monkey

• A large amount of data can be collected relatively quickly
  
  
• Well-designed surveys can be completed easily by the respondents, especially online surveys

• Poorly-designed and conducted surveys will result in poor results
   
• Poor response rates are typical, especially when a random sampling method is used

Observation

• This involves hiring someone to stand in an appropriate location and study consumer behaviour in a store or perhaps judge the potential consumer traffic at a particular location
  
  • Researchers may observe the impact of packaging on consumer choice, or the impact that the particular placement of a product in a store may have on consumer choice

• A useful method to capture data on human behaviour
  
  
• Large numbers can be observed in a short period of time

• Observation needs to be combined with other primary research methods to understand the causes of behaviour

Interviews

• The questions may be set up in a very similar way to a survey, however, an interviewer asks the questions
   
• This method takes longer but does allow the interviewee to ask follow-up questions and gather the information that can easily be missed when conducting surveys

• In-depth question provides detailed opinions and perceptions from participants
  
  
• High response rates can be achieved

• A time-consuming process as interviews are carried out one-to-one
  
  
• Interviewer bias can affect the validity of results

Test marketing

• Free samples are provided for a limited period to the target market to gauge their response to the product
   
• Adjustments to the product or other elements of the marketing mix can be made following feedback

• Perceptions and opinions can be gathered prior to a full product launch
  
  
• Can attract early attention from potential customers

• Producing and distributing free samples can be expensive
  
  
• Competitors may become aware of new products to be launched

Focus groups

• Free range discussions led by a marketing specialist to collect detailed feedback on all aspects of the marketing mix from the target market
   
• Usually limited to a small group of 12-15 people
   
• The group typically meets for 90 minutes to 3 hours

• Detailed information on opinions and perceptions can be gathered
  
  
• Small groups make focus groups relatively easy and inexpensive to organise

• Participants may be reluctant to share their true opinions in a group situation
  
  
• Rewards for participation make focus groups more expensive than other methods such as surveys or observation

• Information gathering is focused on the needs of the business and will not be available to its rivals

• The sample size may be too small and unrepresentative of all of the customers leading to unreliable results

• The business can get in-depth information from respondents, for example, reasons behind certain behaviour

• Bias may mean that researchers can guide respondents to answer questions in a particular way
  • Similarly, respondents may be influenced by the responses of others, or not provide accurate information

• Primary market research is more up-to-date and can be used to ask specific questions and so will be more relevant

• A business may need to hire a specialist market research agency to help and the process can be expensive and time-consuming

• Information is already available and so is quicker to collect than primary research thereby saving time

• Information has been collected for other purposes and so may lack relevance or may not be factually correct e.g. Wikipedia 

• Information is often free (e.g. government websites and internet sources such as Statista) and is cheaper to collect leading to lower costs compared to primary research 

• Can be expensive to purchase market specific secondary data from specialist companies e.g. MINTEL reports 

• Suitable for a small business that lacks a large marketing budget and/or expertise

• Information may be out-of-date, especially in dynamic markets

• The sample size used to gather data may be too small and unrepresentative of all of the customers leading to unreliable results
   
• Bias may mean that researchers can guide respondents to answer questions in a particular way
   
• Respondents in focus groups may be influenced by the responses of others, or not provide accurate information
   
• A business may need to hire a specialist market research agency to help gather primary data and the process can be expensive and time-consuming

• Information has been collected for other purposes and so may lack relevance or may not be factually correct
  
  
• Can be expensive to purchase market specific secondary data from specialist companies such as MINTEL
  
  
• Numerical data may be out-of-date, especially in dynamic markets
   
• Data analysis and interpretation is a skill and individuals within the business may draw incorrect conclusions which are then used to guide business strategy
  
  
• Looking at a small amount of data and then extrapolating the results can provide wrong assumptions from which strategic decisions are made
  
  
• Numerical data may provide insights, but does not provide the reasons for the insights e.g. data may reveal sales volumes are falling, but not the reason for the decline