Unit 4 marker research

Changes in customer spending patterns

- Businesses can gather info on spending patterns -by statistics from the government or purchase market reports from specialist market research agencies -more likely to be interested in spending patterns and spending trends

Changes in customer needs

-Consumers income change so they look at expensive things due to them being wealthy -consumers are influenced by social media and changes in social habits -fashion changes over time seasonal -new technologies result in different needs

Increased competition

-If other businesses have more advanced products or more effectively marketed this could have a dramatic affect -the pressure from competition means that businesses will encourage customers to buy from them in preference to their rivals there are many ways they can do this: -offering better quality products -lowering prices -making there product appear differently -using more powerful adverts and attractive or promotions If not used they will not be able to survive in the market If used could result in loss of profit If they do not respond to market changes they lose market share

Market Orientation

-They will go and do market research -What is changing with is society -Can respond more quickly due to market information

Market Share Analysis

A breakdown of market share data that allows a company to measure its sales performance against those of its competitors is the percentage controlled by a given business To fine the percentage of market share Formula is: Sales of a business/ total sales in the market x 100

making better business decisions

A business may undertake market research to help it make better business decisions. A business may want to make a change to a product, add a new product to its range or change its location. Before it does so it may want to find out whether customers will respond positively to the change. For example, before bringing out a new type of coffee, a cafe might conduct market research to find out whether its customers would buy it. By doing this, the cafe can see whether the change is likely to be a success. Making informed decisions gives a business a higher chance of being successful.

Changes in customer needs

Anticipate changes in customer needs: the business will need to keep looking for any changes in customer spending patterns and see if they can produce goods that customers want that are not currently available in the market.

Using data in market research - the role of social media

As well as using internet research, market reports and government reports, businesses gather market research data through social media. Through social media businesses can reach huge numbers of customers and it allows them to conduct research cheaply and on a large scale. There are several social media platforms and each gives access to local, national and international customers. Some of the benefits of using social media for market research include: it is cheaper than other forms of research, such as using a market research agency, and can often be free it can save time putting information together, eg some online questionnaires put the results into a graph instead of the researcher doing this themselves it allows businesses to spot the latest tastes and trends, and monitor the behaviour of their competition This research could lead to a business bringing out a new product or offering a discount to match its competitors. Without social media, it would be more difficult to find out how tastes and trends are changing, and what competitors are doing.

Satisfying customer needs

Businesses have to satisfy customer needs and wants. This means that they have to produce goods and offer services that customers are prepared to buy. Businesses identify customer needs by carrying out market research. Market research is one of the most important marketing activities; it is the first step in satisfying customer needs. If a business can gather reliable information from customers, they may be able to identify their needs and wants. If they do this accurately and design products that meet those needs, they are more likely to be successful. If possible, businesses need to anticipate customer needs. This means they try to predict what customers want in advance and respond to changes very quickly. Businesses operate in a changing competitive environment and have to keep up with the latest designs, trends, fashions and technology.

Reliability of market research data

Having reliable market research data is essential. Basing decisions on unreliable research can be very costly to a business. For research to be reliable, it must have a high level of validity. This means that the facts and evidence gathered are accurate. The advantages of having reliable market research data include: the business can make properly informed decisions reduces risk means less money is wasted gives a higher chance of business success The consequences of relying on unreliable market research data include: the business making unwise decisions it could ultimately cost the business money the business could bring out products that don't sell the business could fail

To identify customer needs

Identifying customer needs One of the aims of market research is to identify and understand the needs of customers relating to price, quality, choice and convenience. A business must make sure it is providing the right product, at the right price, in the right place, at the right time. By identifying the needs of customers through market research, businesses are able to reduce their level of risk and make business decisions that are more likely to be successful. Customer needs change over time, so it is important for a business to keep up to date and be innovative with its products.

Identifying gaps on the market

Identifying gaps in the market Another purpose of market research is to help a business identify gaps in the market. This is an area where there is demand for a product or service that is not being met. For example, before the first car was invented, an entrepreneur may have noticed that there was a demand to get around more easily and more quickly. Similarly, online music streaming services spotted that there was a demand for more convenient ways to listen to music, so they provided online access to music that could be downloaded. Spotting a gap in the market gives a new business a good chance of success as there will be little competition to begin with.

Secondary

Internet research Internet research includes data taken from competitors' websites, newspaper articles and social media. This provides a business with an overview of information relating to its industry and the types of products and services other businesses offer. Market reports Market reports are industry specific. They may give specific information about an industry as a whole. An example of information that could be found in a market report would be '46 per cent of adults aged 35-50 visit a coffee shop at least once a month'. This could help a business decide which customers to target. Government reports Government reports may consist of general information that is not usually industry specific but can still be useful for a business. Examples include '60 per cent of people aged 16-25 would consider working for £6.50 per hour' or '25 per cent of the population is now aged 60 or above'. A business may use this information to decide what level of pay to offer potential employees, who its target market will be or what kinds of products to develop.

mass market

Mass market-targets all customers within a specific country Advantages -Large pool of customers -cheaper marketing -economics of scale Disadvantage -charge low prices- profits -competition Mass markets selling the same product to all consumers and marketing it in the same way. They produce large quantities so then can exploit. Economies of scale.

Quantities data

Quantitative data: is usually numerical data is gathered through the use of closed questions, such as 'yes' or 'no' responses, multiple-choice options or a rating system can generally be expressed in a graph or chart It has the benefit of being simple and quick to analyse. It can also be analysed in a way that gives easy-to-understand results. However, quantitative data lacks specific opinions and doesn't always allow a business to see exactly what its customers think

Importance of marketing

Satisfying customer needs by producing and selling goods and services Maintaining customer loyalty: building customer relationships through a variety of methods that encourage customers to keep buying one firm's products instead of their rivals'. For example, loyalty card schemes, discounts for continuous purchases, after-sales services, messages that inform past customers of new products and offers etc

Primary market research

Surveys A survey asks questions to get opinions and learn about customers' experiences with a product or service. A survey can be conducted using methods such as: an online questionnaire a paper-based questionnaire an interview a focus group Questionnaires A questionnaire is a set of questions to find out customers' opinions. It can be done online, in person or through the post. When creating a questionnaire, businesses need to have a clear goal and ask questions linked to this goal. Questionnaires are made up of open and closed questions: Open questions aim to get detailed opinions and allow customers to respond using their own words. An example of this is, 'What do you think of our new latte and why?'. This question would allow someone to express their thoughts about the new latte and give the reasons for their opinion. Closed questions do not allow respondents to give reasons for their responses. For example, 'Do you like our new latte - yes or no?' or 'On a scale of one to five, how likely would you be to purchase our new hot chocolate?'. Focus groups A focus group is a group interview. It can take place in person or online. In a focus group, people are asked questions or given scenarios and asked for their opinions about a product or service. Their replies provide businesses with more in-depth information than questionnaires. The size of the group is important. If the group is too small, not enough opinions will be gathered. If the group is too big, some people may not get a chance to contribute. Observations Observations involve watching customers to find out their reactions to certain products or services. For example, this could involve watching someone try a drink for the first time or monitoring which products a customer notices first when they go into a shop.

The power and importance of changing customer needs:

The power and importance of changing customer needs: Firms need to always know what their consumers want (and they will need to undertake lots of research and development to do so) in order to stay ahead of competitors and stay profitable. If they don't produce and sell what customers want, they will buy competitors' products and the firm will fail to survive.

Keeping customer loyalty

To train customers: Businesses must continue to satisfy there needs by developing new products -providing first class customer service -maintaining effective communication skills -reward their loyalty By Rewarding cards : awarded points for how much they spend vouchers Free gifts : loyal customers may receive gifts Charitable donations: make donations to charities as a result of customer purchases

Reducing risk

When setting up a business, entrepreneurs face a huge amount of risk. Often they risk their own money, with many businesses failing within the first year. By undertaking market research, entrepreneurs are able to reduce this risk. Market research enables entrepreneurs to find out information, such as: what customers want what needs aren't currently being met how much competition there will be what target market the business should aim at how much the business should charge for its product or service

qualative data

is usually expressed as opinions includes descriptive information is gained using open-ended questions, eg 'What do you like about the product and why?' It provides a business with detailed information that cannot be expressed in a graph or chart. While qualitative data gives detailed information, it can be time consuming and costly to gather and analyse.

Niche market

small group of consumers with the same buying habits with in a larger market Niche markets selling to a small market segment that may be untouched by larger businesses. They have small customer groups that have similar specific needs. The survive because they often avoid Competition.

Product Orientation

when a business concentrates on the product improving its features and usage rather than carrying out research to find out what customers want -unique selling point -no competitors -concentrate on product features