Gnaviyani Atoll Education Centre / Business Studies / Market Research / Study Module   2009 

MARKET RESEARCH
Market research involves ga thering and analysing data f rom the marketplace ( i.e. f rom
consumers and potential consumers) in order to provide goods and services that meet their needs.

Market research and marketing research are often confused. 'Market' research is simply research
into a specific market. It is a very narrow concept. 'Marketing' research is much broader. It not
only includes 'market' research, but also areas such as resea rch into new products, or modes of
distribution such as via the Internet. Here are a couple of definitions:

Marketing research is the function that links the consumer, customer, and public to the marketer
through information - information used to identify and define marketing opportunities and
problems; generate, refine, and evaluate marketing actions; monitor marketing performance;
and improve understanding of marketing as a process. Marketing research specifies the
information required to address these issues, designs the methods for collecting information,
manages and implements the data collection process, analyzes, and communicates the findings
and their implications.

The Marketing research Process

Marketing research is gathered using a systematic approach. An example of one follows:

1. Define the problem. Never conduct research for things that you would 'like' to know. Make
sure that you really 'need' to know something. The problem then becomes the focus of the
research. For example, why are sales falling in New Zealand?

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 Gnaviyani Atoll Education Centre / Business Studies / Market Research / Study Module   2009 

2. How will you collect the data that you will analyze to solve your problem? Do we conduct a
telephone survey, or do we arrange a focus group? The methods of data collection will be
discussed in more detail later.

3. Select a sampling method. Do we us a random sample, stratified sample, or cluster sample?

4. How will we analyze any data collected? What software will we use? What degree of accuracy
is required?

5. Decide upon a budget and a timeframe.

6. Go back and speak to the managers or clients requesting the research. Make sure that you
agree on the problem! If you gain approval, then move on to step seven.

7. Go ahead and collect the data.

8. Conduct the analysis of the data.

9. Check for errors. It is not uncommon to find errors in sampling, data collection method, or
analytic mistakes.

10. Write your final report. This will contain charts, tables, and diagrams that will communicate
the results of the research, and hopefully lead to a solution to your problem. Watch out for errors
in interpretation.

Sources of Data - Primary and Secondary

There are two main sources of data - primary and secondary. Primary research is conducted from
scratch. It is original and collected to solve the problem in hand.. Secondary research, also
known as desk research, already exists since it has been collected for other purposes.

Primary Research
This is research designed to gather primary data, that is, information which is obtained
specifically for the study in question. It can be gathered in three main ways - observation,
questionnaires and experimentation.

– First hand information

– Expensive to collect, analyse and evaluate
– Can be highly focussed and relevant
– Care needs to be taken with the approach and methodology to ensure accuracy
– Types of question – Closed – limited information gained; Open – useful
information but difficult to analyse

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 Gnaviyani Atoll Education Centre / Business Studies / Market Research / Study Module   2009 

There are many was to conduct primary research. We consider some of them:

1. Interviews

2. Mystery shopping

3. Focus groups

4.Observation:

5.Questionnaires:

6.Experimentation:

Interviews

This is the technique most associated with marketing research. Interviews can be telephone, face-
to-face, or over the Internet.

¾ Telephone Interviews

Telephone ownership is very common in developed countries. It is ideal for collecting data from
a geographically dispersed sample. The interviews tend to be very structured and tend to lack
depth. Telephone interviews are cheaper to conduct than face-to-face interviews (on a per person
basis).

Advantages of telephone interviews

• Can be geographically spread

• Can be set up and conducted relatively cheaply
• Random samples can be selected
• Cheaper than face-to-face interviews

Disadvantages of telephone interviews

• Respondents can simply hang up

• Interviews tend to be a lot shorter
• Visual aids cannot be used
• Researchers cannot behavior or body language

¾ Face-to-face Interviews

Face-to face interviews are conducted between a market researcher and a respondent. Data is
collected on a survey. Some surveys are very rigid or 'structured' and use closed questions. Data
is easily compared. Other face-to-face interviews are more 'in depth,' and depend upon more
open forms of questioning. The research will probe and develop points of interest.
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 Gnaviyani Atoll Education Centre / Business Studies / Market Research / Study Module   2009 

Advantages of face-to-face interviews

• They allow more 'depth'

• Physical prompts such as products and pictures can be used
• Body language can emphasize responses
• Respondents can be 'observed' at the same time

Disadvantages of face-to-face interviews

• Interviews can be expensive

• It can take a long period of time to arrange and conduct.
• Some respondents will give biased responses when face-to-face with a researcher.

The Internet

The Internet can be used in a number of ways to collect primary data. Visitors to sites can be
asked to complete electronic questionnaires. However responses will increase if an incentive is
offered such as a free newsletter, or free membership. Other important data is collected when
visitors sign up for membership.

Advantages of the Internet

• Relatively inexpensive
• Uses graphics and visual aids
• Random samples can be selected
• Visitors tend to be loyal to particular sites and are willing to give up time to complete the
forms

Disadvantages of the Internet

• Only surveys current, not potential customers.

• Needs knowledge of software to set up questionnaires and methods of processing data
• May deter visitors from your website.

Mail Survey

In many countries, the mail survey is the most appropriate way to gather primary data. Lists are
collated, or purchased, and a predesigned questionnaire is mailed to a sample of respondents.
Mail surveys do not tend to generate more than a 5-10% response rate. However, a second
mailing to prompt or remind respondents tends to improve response rates. Mail surveys are less
popular with the advent of technologies such as the Internet and telephones, especially call
centers.

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Mystery Shopping

Companies will set up mystery shopping campaigns on an organizations behalf. Often used in
banking, retailing, travel, cafes and restaurants, and many other customer focused organizations,
mystery shoppers will enter, posing as real customers. They collect data on customer service and
the customer experience. Findings are reported back to the commissioning organization. There
are many issues surrounding the ethics of such an approach to research.

Focus Groups

Focus groups are made up from a number of selected respondents based together in the same
room. Highly experienced researchers work with the focus group to gather in depth qualitative
feedback. Groups tend to be made up from 10 to 18 participants. Discussion, opinion, and beliefs
are encouraged, and the research will probe into specific areas that are of interest to the company
commissioning the research.

Advantages of focus groups

• Commissioning marketers often observe the group from behind a one-way screen
• Visual aids and tangible products can be circulated and opinions taken
• All participants and the research interact
• Areas of specific interest can be covered in greater depth

Disadvantages of focus groups

• Highly experienced researchers are needed. The are rare.

• Complex to organize
• Can be very expensive in comparison to other methods

Observation:

involves watching people and monitoring and recording their behaviour (e.g. television viewing
patterns, cameras which monitor traffic flows, retail audits which measure which brands of
product consumers are purchasing).

Questionnaires:

are a means of direct contact with consumers and can take a variety of forms. Personal
questionnaires (such as door-to-door interviewing), postal questionnaires, telephone
questionnaires and group questionnaires (such as asking for the attitudes of a group of consumers
towards a new product). Questionnaires can be a very expensive and time-consuming process
and it can be very difficult to eliminate the element of bias in the way that they are carried out. It
is important that every respondent must be asked the same questions in the same order, with no
help or emphasis being placed on certain questions / responses.

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 Gnaviyani Atoll Education Centre / Business Studies / Market Research / Study Module   2009 

Experimentation:

involves the introduction of a variety of marketing activities into the marketplace and then
measuring the effect of each of these on consumers. For example, test marketing, where a new
product is launched in a small, geographical area and then the response of consumers towards it
will dictate whether or not the product is launched nationally.

Quantitative and Qualitative Information:

• Quantitative – based on numbers – 56% of eighteen year olds drink alcohol at least four
times a week.
Doesn’t tell you why, when, how.

• Qualitative – more detail – tells you why, when and how!

Secondary Research

Internal Sources
• Company Accounts
• Internal Reports and Analysis
• Stock Analysis
• Retail data - loyalty cards, till data, etc.
External Sources
• Government Statistics (ONS)
• EU - Euro Stat
• Trade publications
• Commercial Data - Gallup, Mintel, etc.
• Household Expenditure Survey
• Magazine surveys
• Other firms’ research
• Research documents – publications, journals, etc.

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 Gnaviyani Atoll Education Centre / Business Studies / Market Research / Study Module   2009 

Sampling Methods

Random Samples:
– equal chance of anyone being picked
– May select those not in the target group – indiscriminate
– Sample sizes may need to be large to be representative
– Can be very expensive

Stratified or Segment Random Sampling

– Samples on the basis of a representative strata or segment
– Still random but more focussed
– May give more relevant information
– May be more cost effective

Quota Sampling
– Again – by segment
– Not randomly selected
– Specific number on each segment are interviewed, etc.
– May not be fully representative
– Cheaper method
Cluster Sampling
– Primarily based on geographical areas or ‘clusters’ that can be seen as being
representative of the whole population
Multi-Stage Sampling
– Sample selected from multi stage sub-groups
Snowball Sampling
– Samples developed from contacts of existing customers – ‘word of mouth’ type
approach!

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 Gnaviyani Atoll Education Centre / Business Studies / Market Research / Study Module   2009 

Purpose

• Advantages of Market Research

– Helps focus attention on objectives
– Aids forecasting, planning and strategic development
– May help to reduce risk of new product development
– Communicates image, vision, etc.
– Globalisation makes market information valuable (HSBC adverts!!)

• Disadvantages of Market Research

– Information only as good as the methodology used
– Can be inaccurate or unreliable
– Results may not be what the business wants to hear!
– May stifle initiative and ‘gut feeling’
– Always a problem that we may never know enough to be sure!

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 Gnaviyani Atoll Education Centre / Business Studies / Market Research / Study Module   2009 

SAMPLE ANSWER

Access the importance of marketing research for a company like the IKEA. (12)

Marketing research is the collection, collation and analysis of data relating to the marketing and
consumption of goods and services.

Desk research may provide information which may be useful to identify changes in market
demand. Secondary data may be important when IKEA in deciding to open a store in a
completely new country or region. The company is likely to achieve information like the no. of
furniture shops in the area and about the popularity of each shop and their locations. Although it
is cheap method to obtain data, information collected may be outdated. Field research on the
other hand is expensive to undertake and must be made regularly to be effective. Considering the
no of outlets and countries IKEA operates in it might be quite expensive.

Market research can be used to monitor the popularity of the different products. Unprofitable
products can be withdrawn from the market and popular products can be stocked in high
amounts. There have been complaints that the stores are frequently out of popular products.
Marketing research could have been undertaken to see which products are popular in different
countries and those could be stored in high amounts.

With the help of market research, the IKEA can identify marketing strategy to improve the
market positioning. It is important for IKEA to improve its public relations in order to counter
the bad publicity from the chaotic opening in Edmonton. It is given in the extract that even after
the bad publicity IKEA has decided to open further 10 more stores. This decision if not backed
by market research may cause the company huge loss in the future.

As suggested in the extract the company carries out little market research. However, market
research could have shown the popularity of the store about to open in London. The chaos could
have been avoided by allowing only customers who had tickets (which would have been
providing at other stores or promotional campaigns).

IKEA operates in a highly competitive market, hence to remain competitive and be ahead of its
competitors like MFI, it needs to take into account the changes in market. An ageing population
may mean that the company should concentrate on the products used by this segment.

Different techniques used in marketing research can give different results which can be
contradictory, increasing uncertainty. Reliability of the research and effectiveness in terms of
cost must be justified. Moreover, carrying out marketing research does not necessarily guarantee
success. It may minimize the risks but does not eliminate them.

*********Good Luck*********

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