Market research will reduce the risk of launching a new product because:
Decisions are based on evidence (information collected by market research). Therefore, before launching a new product market research is carried out to find out if there is any demand. Therefore, it is more likely that there will be demand for the product and this means that the high costs of developing and launching the product can be recovered.
Primary market research
Information (or the collection of information), which does not already exist that has been collected for a firm’s specific purpose and is directly related to the firm’s needs.
Methods of primary market research
Questionnaires / surveys
Observation
Loyalty cards
The Dephi Technique
Secondary market research
Information (or the collection of information), which has already been collected for another purpose by someone else.
Sources of secondary data
The government
international organisations,
businesses that specialise in market research, e.g.: Keynotes, Mintel
trade associations,
the competition,
newspapers,
Business Link.
Types of secondary data that could be used by a small business person
www.yell.com
Trade associations (organisations that represent specific businesses) – trade magazine
Business Link
Competition’s research
Government statistics
Information from companies that specialise in collecting market research, e.g. Keynotes.
Test marketing
Test marketing is when a business launches its product in a small part of the market before selling it in the whole market.
The point is to see whether there is any demand and to find and solve any problems with the product before selling it in the whole market. It is more expensive to sell the product in the whole market so test marketing solves any problems before the costs get high.
Sampling
A sample – a group of respondents, that are chosen to be representative of the views of the target market.
Target market – the precise profile of the customers a firm wishes to sell to, e.g: 18-25 year old men.
Types of sampling methods
1. Random sampling
Every member of the population has an equal chance of being interviewed.
2. Quota sampling
The sample of people interviewed reflect the characteristics of the market as a whole, i.e:
They are recruited in proportion to the demographic profile of the target market.
E.g.: The researcher might be given a target of interviewing 60 males between 20 and 29 years of age and 40 females of between 30 and 39 years of age.
3. Stratified sampling
A sampling method where a selection of people is randomly chosen from within a sub-group.
E.g: If a survey aims to find out the views of 18 to 25 year old females, they would randomly select people within that group to ask questions.
Factors that affect the choice of sampling method:
1. Available finance
2. The nature of the product
3. The level of risk
4. The target market From Ashbourne Schools fab Blog
