Market research
Purpose of market research
Market research is the process of gathering information about the market, customers, and competitors. It helps businesses:
- Identify customer needs before developing a product.
- Reduce risk by testing demand before committing investment.
- Understand the competitive landscape — who are the rivals, what do they offer?
- Set pricing by understanding what customers are willing to pay.
- Plan marketing — which channels reach the target audience?
Primary market research
Primary research = data collected first-hand for a specific purpose. It is original data.
| Method | Description | Advantage | Disadvantage |
|---|---|---|---|
| Survey / questionnaire | Written questions (online, paper, face-to-face) | Reaches many respondents; cheap online | Low response rate; biased if questions are leading |
| Focus group | Small group discussion led by a researcher | Rich qualitative insight; unexpected findings | Expensive; small sample; researcher bias |
| Observation | Watching customers in-store or online (A/B testing) | Real behaviour, not self-reported | Cannot explain why behaviour occurs |
| Trials / product testing | Giving a sample product to a test group | Real-world feedback before launch | Expensive; slow; rival may copy the idea |
| Interviews | One-to-one in-depth conversations | Very detailed qualitative data | Time-consuming; small sample |
Social media and big data: modern businesses use social media analytics and large-scale digital data (search trends, clickstreams) as a form of primary observation at low cost.
Secondary market research
Secondary research = using data already collected by someone else for a different purpose. It is existing data.
Sources include:
- Internal data: sales records, customer databases, previous financial reports.
- External data: government statistics (ONS), trade association reports, competitor annual reports, newspaper articles, academic studies.
- Market research agencies: Mintel, Kantar — but these reports are expensive.
Secondary research is quicker and cheaper than primary, but may be outdated, irrelevant, or unreliable (collected for a different purpose).
Qualitative vs quantitative data
| Feature | Qualitative | Quantitative |
|---|---|---|
| Type of data | Words, opinions, feelings | Numbers, statistics |
| Methods | Focus groups, interviews, open-ended surveys | Questionnaires, sales data, observation counts |
| Insight | Explains why | Shows how many or how much |
| Sample size | Small | Large |
| Analysis | Subjective; difficult to compare | Objective; easy to analyse statistically |
Best practice: use both. Quantitative data shows a pattern; qualitative explains the reason behind it.
Reliability of data
Market research data may be unreliable if:
- Sample size is too small — results are not representative.
- Sample is unrepresentative — e.g. surveying only over-40s for a product aimed at teenagers.
- Questions are biased/leading — "Don't you agree that our product is excellent?" skews responses.
- Data is outdated — a 2019 travel survey is not representative of 2023 consumer behaviour.
- Respondents are dishonest — social desirability bias (people say what they think is "correct").
Edexcel examiner notes
Edexcel frequently presents a business scenario and asks: "Recommend a suitable method of market research. Justify your recommendation." The expected approach:
- Name a method.
- Explain why it suits this specific business (size, budget, product type, target market).
- Acknowledge a limitation.
AI-generated · claude-opus-4-7 · v3-edexcel-business