A market oriented business continually identifies, reviews and analyses consumers' needs.
A product oriented business focuses on what it has done well in the past.
Model T Ford: 'any colour you want as long as it is black'.
Other examples:
Advantages and disadvantages of each approach here.
Methods of primary and secondary market research:
Primary research
The gathering of first-hand data that is specific to a firm's needs.
You could use: surveys or observation to collect information.
Secondary research
Information collected from second-hand sources such as Google, reference books, government statistics or market intelligence reports.
Quantitative research
Research using pre-set questions among a large enough sample size to provide statistically valid data.
An example would be using a questionnaire to question 200 people in a particular market segment.
Qualitative research
In-depth research into the motivations behind consumer behaviour or attitudes. It may include the use of focus groups.
Should a television company commission a programme where viewers send in video clips of food eating contests?
Market research is used to:
- Identify and anticipate customer needs and wants.
- Quantify (counting or expressing something in numbers) likely demand.
- Gain insight into customer behaviour.
Limitations of market research:
1. Sample size
It is impossible to ask all possible customers questions about a product or service.
Market research will involve a sample of possible customers.
The sample size must be large enough to make it statistically valid and avoid statistical bias.
2. Bias (cause people to feel or show positive feelings or the opposite for or against something.)
A badly worded questionnaire could cause bias.
The behaviour of interviewers may influence peoples opinions.
Asking a non representative sample of people may cause bias.
Use of ICT to support market research:
Companies can use their website for questionnaires.
But...who completes these online?
Social Media:
Companies can monitor social media to see what the public are saying about them.
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Or companies could be more proactive on social media and attempt to build increased brand loyalty.
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Databases:
Companies collect a vast amount of information about their customers.
This can be used as a very powerful research tool.
If you have a Tesco Clubcard what information does the company know about you?
Market segmentation
Analysing a market to identify the different types of consumer.
The main ways a market can be segmented are:
- Demographically e.g. by age, social class or sex.
- Psychographically (by attitudes and tastes).
- Geographically, by region.
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