The Role of Market Research (CIE IGCSE Business)

• Market research is the objective collection, compilation and analysis of information about a market
  
• Effective market research will help the business to
  • Reduce risk when launching new products or entering new markets
  • Identify and understand the future needs and wants of customers
  • Understand consumer behaviour 
  • Identify how much consumers are prepared to pay
  • Identify potential gaps in the market (market niches) which can be exploited to increase sales
  • Identify competitors and gauge their potential strengths and weaknesses
     
• With effective market research businesses are well-placed to make informed decisions about the most effective way to use their valuable resources and develop a suitable marketing mix
  
• On-going market research helps businesses to update their marketing strategy in line with customers changing needs and preferences

• Market orientation is an approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs 
  • Consumers are at the centre of marketing decisions
  • Products which respond to consumer needs are developed 
  • Market-orientated businesses are usually more adaptable to to changing customer needs
    • For example, universities often develop new courses based on the feedback they receive from students and the changing requirements of employers
       
• Market orientation should lead to a business benefitting from increased demand, increased profits, and a valued brand image as its products are more desirable than those of rivals
   

 Diagram to show the Tools of Market Orientation

Market orientation combines market research and market testing with a customer focus

• Market testing is the process of assessing customer reaction to a product or service before it is launched
  • It determines whether there is a potential market for the product or service
  • Features that are likely to be most appealing to consumers
  • For example, a healthcare business may conduct a focus group for a new brand of toothpaste
    
    
• Customer focus means putting your customers' needs first
  • Customer-focused businesses focus on enhancing customer satisfaction and building strong customer relationships