Market Research
Businesses sell to customers in markets. A market is any place where buyers and sellers meet to trade products - it could be a high street shop or a website. Any business in a marketplace is likely to be in competition with other firms offering similar products. Successful products are the ones which meet customer needs better than rival offerings.
Markets are dynamic. This means that they are always changing.
Market research involves gathering data about customers, competitors and market trends.
Markets are dynamic. This means that they are always changing.
Market research involves gathering data about customers, competitors and market trends.
- Primary research (field research) involves gathering new data that has not been collected before. For example, surveys using questionnaires or interviews with groups of people in a focus group.
- Secondary research (desk research) involves gathering existing data that has already been produced. For example, researching the internet, newspapers and company reports.
Market Segments
Most markets contain different groups of customers who share similar characteristics and buying habits. These collections of similar buyers make up distinct market segments.
Targeted marketing
Breaking down a market into submarkets can lead to a business opportunity.
For example, a magazine publisher can target a specialist journal at one group of customers of similar age, gender, class or income.
Another tool used to help identify a business opportunity is a market map. A market map is a diagram that identifies all the products in the market using two key features.
The diagram below shows how four local cafés are competing in terms of price and quality.
The black circle identifies a gap in the market. There is a business opportunity for a new café offering standard quality products at standard prices.
Competition
Competition in the market place can be good for customers. Governments encourage competition because it can help improve these factors:
- Price: If there are several retailers, each retailer will lower the price in an attempt to win customers. It is illegal for retailers to agree between themselves to fix a price. They must compete for business.
- Product range: In order to attract and satisfy customers, companies need to produce products that are superior to their competitors.
- Customer service: Retailers that provide customers with a helpful and friendly service will win their loyalty.