31 Market Research

MARKET RESEARCH 3
3.1
CONDUCTING MARKET
RESEARCH; DRAWING
THE RIGHT CONCLUSIONS

. Doing Market Research

. Market Research; Examples Of Information Needed

. Market Research 1

. Market Research 2

. Some Market Research Information Sources

. Analysing The Competition

. The SWOT Analysis

P 95

CONDUCTING MARKET RESEARCH; DRAWING THE RIGHT CONCLUSIONS 3.1
DOING MARKET RESEARCH
Market research means you collect and analyse information
about the market, your customers and competitors, then draw
up or change plans accordingly. You can do desk research and/or
field research.

Desk Research Field Research
This makes use of information already Going out and talking to people
collected (’secondary information’). It can (customers and competition), counting
use information from inside the organisation them or watching what they are doing via:
(the ’Internal Market Audit’) or information . Observation of peoples’ reactions
from outside (the ’External Market Audit’)
to your product or competitor
using the following sources:
. Interviews on the street or at home,
. Yellow Pages, Thomson Local, Kelly’s
using written questions
Directory, or other company information
. Phone interviews, short and to the point
. Trade association yearbooks, trade
. Postal surveys fill-in questionnaires,
directories, trade press and newspapers
best used with existing customers
. Market surveys, MINTEL reports and
. Omnibus surveys by commercial market
market reviews
surveyors, pay per question asked
. Local authority, Chamber of Commerce
. Focus groups of typical customers,
and TEC surveys
cheap and effective
. Government statistics, including census,
social surveys and purchasing information
. Competitor literature and publicity
. Books on marketing, selling and
customer behaviour

P 96

Plan Of Action Remember to make these decisions
according to what you are trying to decide
No market research can occur until a plan
or achieve. Will the information arrive in
of action has been drawn up. Note this is
time to be used? Will you have to change
different from the Marketing Plan. For each
plans as a result?
item decide:
. How will the information be obtained? Random and informal opportunities to
. Who will do the research? acquire information are also useful: chatting
with customers, suggestions for changes
. What can you do yourself and what will
to a product or service and conversations
you need help with? with suppliers. Look out for changes,
. Where will you obtain the information? patterns and trends.
. How much will it cost (in time and money)?
. When will it get done (draw up a timetable
and deadlines)?

P 97

MARKET RESEARCH; EXAMPLES
OF INFORMATION NEEDED
Size of Market The Product
What is the total market - industrial, Who uses the product?
consumer, home and overseas?
Frequency of purchase?
Is it growing or shrinking?
Who else could use the product?
Are there any regional biases
How can it be improved?
or preferences?
What do customers think of it?
What are the seasonal influences?
Is it branded?
Where are the big users?
Is the price right?
Is it a well developed, saturated market
or are new products entering it? Are specials produced?

Is it prone to fashions, short runs, Can it be personalised?
cyclical changes? What are the returns?
Is new technology likely to alter the market? What new products are envisaged and
What changes may affect demand? how will they tie in with existing lines?

The Competition The Customer
Who are the main competitors and what How can you reach them?
market share do they enjoy? What is the customer profile?
What is their product range and what What are their needs?
do customers like?
What are their strengths and weaknesses?
Where do you have a competitive edge?

Your Own Performance
Where do you make the most profit and
where is the potential growth?
What extra lines or service could be sold?
How do you promote yourself and compare
with your competition?

P 98

MARKET RESEARCH 1
Any organisation intending to introduce a new product or service,
for instance a group of people starting out in business, needs to
establish that there is both a demand for the product or service
and that conditions exist for it to be provided. Market research
provides the necessary information. There are four stages to any
market research.

1 : Deciding What Questions 2 : Drawing Up A Research Plan
Need To Be Asked You must first determine what you are
The most useful questions that could be trying to find out, who you are finding
asked are: ’how often?’, ’how much?’, this information out from, where the
’when?’, ’where?’, and ’why?’. A group information can be obtained and how best
setting up a restaurant might ask: to obtain it. Then tasks must be drawn
up matching these aims, responsibility
. How often do people eat out
assigned, a timetable set and a method
at restaurants?
for analysing and reporting the information
. How much do they spend/are they (if necessary) agreed.
willing to pay?
. When do people eat out?
. Where do they go to eat out? 3 : Collecting The Information
. Why do people eat out/why would This depends on information, either primary
information (that you obtain directly) or
they buy our meals?
secondary information (that other people
In getting this information, it may be useful have found out).
to know who you are getting the information
Primary information can be collected
from. In this way you can decide if particular
by personal interviews, telephone
kinds of people act in particular kinds of
interviews, or postal questionnaires.
ways: ’Young people seem to like fast food’,
It can include street surveys, talking to
’older people spend more money’, ’people
groups of potential customers, observation
with low incomes only eat out on special
(especially of competitors), talking to similar
occasions’ etc. Your marketing strategy
organisations in other areas and talking
may try to make use of these patterns
to suppliers or other people in the industry
of behaviour.
or sector.

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Secondary information includes The Personal Interview
statistics on the product or service area,
Very time consuming and not much
socio-demographic information, competitor
use unless, used with a questionnaire, it
analysis, trade directories and journals,
provides an opportunity to market or sell
government statistics e.g. the census.
the product/service to the interviewee.
All of these should be in or available from
The interviewee is made aware of the
the reference library. The Yellow Pages
product or service, interest is created and
or Thomsons, trade associations, the local
they may be persuaded to buy or use the
Council, research organisations, competitor
product/service.
brochures, the Chamber of Commerce and
local enterprise agencies may all provide The Telephone Interview
useful information.
Perceived as low cost and effective but
The starting point for market research needs careful preparation to reach the
should be secondary information since this target group. Can be used to obtain sales
has already been gathered, organised and or users but people called may be hostile
analysed. But secondary information may or deflationary.
not be enough. Primary information is
Observation
obtained in the following ways:
Just looking can tell you, for instance,
The Questionnaire what people are doing, how they are
The most common method but buying, who they buy from, where they
usually is disappointing. People see it buy and how often.
as a waste of time and intrusive. Postal
questionnaires have response rates of
1-5%. The questionnaire works best when 4 : Analysing And
it is either face-to-face or the questionnaire Reporting The Information
has been targeted on key individuals who,
Analysis must begin by returning to the
perhaps through a letter or telephone call,
original question of what you were trying to
have been informed about the proposed
find out. The information must be organised
product or service and see some advantage
in an understandable way. You must be able
to them (e.g. saving money) through ’being
to present this information to others so
sold’ on it.
they can understand it and draw the same
The Focus Group conclusions. Your analysis must be honest.

A group of ’ideal’ customers or users who
represent the kinds of people you are trying
to reach give their views on the quality of
the product/service, the price, the publicity
material, the product’s usability and its
acceptability. This can be a relatively cheap
method (especially where customers or
users exist already) of finding out consumer
attitudes to a product or service.

P 100

MARKET RESEARCH 2
The Chartered Institute of Marketing’s Customer-Focused Marketing
definition talks about satisfying needs
Marketing is about serving the customer,
/requirements. This definition is expanded
placing them first and recognising that
to include profits.
customers have many product and service
providers from which to choose.
In simple terms:
As potential business owners you will be
1 : Identifying asking yourself, ’where are we now?’,
Finding out what potential and current ’where do we want to get to?’ and ’how
customers want now. do we get there?’. You might approach the
same questions from the customer’s point
2 : Anticipating
of view.
Finding out and forecasting what they
will want in the future. . Who are our existing/potential customers?

3 : Satisfying . What are their current and future needs
Providing products or services that meet and wants?
customers needs, and ensuring this is . How can we satisfy these needs
being done to a satisfactory standard. and wants?
. Can we provide a service or product our
customers will value?
. Do we have good communication channels
to talk to our customers?
. Can we deliver a competitive
service/product?
. Why should our customers buy and
continue buying from us?

Within the limits of your budgets and
resources, you must try to find the
answers to these questions.

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The Purpose Of Market Research Kinds Of Market Research
The purpose of market research is to There are two categories of market
provide you with basic information about research - quantitative or qualitative.
your potential market to enable you to
Quantitative Research
make informed decisions.
Any information which can be expressed
Ask yourself whether you have enough
using numbers as a measure is considered
information about your customers,
quantitative e.g. sales information,
competitors, and trends in the industry
accounting details and statistics.
in which you intend to trade.
Qualitative research
Market research will help you to establish
the following: This is concerned with information that
is based on description e.g. description of
. Who will buy your products/services?
consumer behaviour, market segments
. Who buys your competitor’s and product performance.
products/services?
. What sales level you can realistically Market research is not a one-off exercise
undertaken before trading. You should
forecast?
undertake market research:
. What are people prepared to pay for
. Before entering the market
the products/services?
. When expanding into new markets
. What is the size of your potential market?
- either product or geographical
. What the reaction would be to the
. Continually when operating the business
introduction of new products/services?
. Where the products/services are
bought currently?
Doing Market Research
. Where you should sell your
In order to obtain information you will
products/services?
have to consider two areas:
. Why people buy specific
1 : Desk Research
products/services?
2 : Field Research
The results of this market research will
enable you to make informal decisions, Desk Research
react to changes in the market place Desk Research is the analysis of published
(e.g. legislation or technological advances) material. It is usually the starting point of
and confirm or disprove any assumptions any research. Its main benefits are that it
you may have. is quick and inexpensive. Its main failing
is that the material is often dated and
not comprehensive.

P 102

Information for desk research can Alternatively, try to access the information
be obtained from external or internal through libraries.
business data. Examples include:
Sources of published data include:
. Sales information
. Competitor information Trade information produced by trade
associations, in trade press reports
. Communication with customers and surveys. There are also specialist
(face-to-face, mailshots, telephones etc.) publishers who compile reports and
. Reference libraries undertake surveys in specific markets.

. Chamber of Commerce, Business Links Limited companies produce annual
/Business Eye etc. company reports and accounts that can
be obtained through Companies House.
Internal business data, however, is mostly
Shareholder reports are also useful.
applicable to existing businesses as new
businesses will not have data to base their Useful information can be gained from
work on. government publications such as:
. Census data
Information You Need To Gather
. Family expenditure surveys
You will need information on:
. The market size (how big is the market?) . National income statistics

. The market scope . Trade and manufacturing trends

(how wide is the market?) (in ’trade magazines’)

. The market share (both yours and Competitors’ literature can also be
your competitors’) a valuable source of information.
. Selling methods
It is worthwhile trying to identify someone
. Prices and discounts in the same line of business in another
. Channels of distribution area who may be prepared to give you
information and advice. Try contacting
(how to distribute?)
trade and professional associations, banks,
. The future of the market business clubs etc. that are related to your
(what might happen?) business field. Do they have a directory
. The factors which influence buying or have local or national support groups?
decisions (why the buyer decides to buy?) What other services and resources can
they offer and at what cost? Obtain as
. Who makes buying decisions?
much information as possible - in particular
In addition you need to profile your concerning:
potential customers, regarding age, . Your existing/potential customers
location, income etc. There is a vast array . Your competition
of published information available. This
. Your suppliers
information may be specific or general.
Some may carry a cost for purchasing. . The sector in which you intend to compete

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Field Research The main advantage of face-to-face
conversation compared to telephone
Field Research is the collection of new or
conversation is the scope for personal
additional data. This involves using one of
interaction: it gives you the chance to
the following research techniques:
strike up a relationship which can lead to
. Surveys
an open question and answer discussion.
. Observation
Observation
To be of value the information must be
Observation is another method of
accurate, current, sufficient and relevant.
conducting field research. Observation
Surveys can be where customers are observed, or it
may involve visiting exhibitions or counting
Surveys can be divided into three types:
heads. As a research method it can be
1 : Postal surveys are useful in obtaining useful in obtaining quantitative data. It is
quantitative information. The main also possible to pose as a customer to
drawback of this method is that there obtain information from your competitors.
is often a poor response rate and there Getting out and about in the car to find
are few opportunities to follow them up. potential customers and competitors comes
2 : Telephone surveys are a good way of under this heading.
interviewing people. The main advantage of Test marketing is a technique more often
telephone interviewing is that it is relatively used in product research. It literally means
cheap and fast. Their success depends on testing out the product or service with a
speaking to the right person and on them group of people and noting what they think
being willing to co-operate. The main about it.
drawbacks to this type of interview are:
Whichever method of obtaining information
. The interviewee can get interrupted
you choose you will have to produce a
- this may be inconvenient
questionnaire. Questionnaires are used
. The interviewee has no proof of who you to find out all types of information and to
are - they may think you are a competitor make sure that you are asking for the same
. Details sought on the phone may not information from all the people that you
be to hand deal with:
. Facts
However, phoning up competitors and
posing as a customer to get information . Knowledge
about prices, service details, delivery times . Intentions
and payment terms can be highly useful and
. Opinions
effective in helping you design products and
services that can compete in the market. . Attitudes
. Motivation
3 : Personal interviews are more expensive
than either postal or telephone interviews . Lifestyle
due to the time involved but, on the basis You will need to ’sell’ the idea of
of information obtained, they can be the completing the questionnaire, to get
most useful. people to participate.

P 104

SOME MARKET RESEARCH
INFORMATION SOURCES
A lot of these sources can be found on the Web or in your local
reference or business library.

The A-Z Of UK Marketing Data help by indicating trends and tracing the
progress of many individual products
This provides basic marketing data for
manufactured by firms in many industries.
several hundred UK markets, from adhesives
They are published in three main series:
to zip fasteners. It is arranged by product
The Production Monitors, The Service and
area, size, production, imports and exports.
Distribution Monitors and Miscellaneous
Monitors.
Annual Abstract Of Statistics
This is a good source of all UK statistics. Annual Census Of Production Monitors
Figures are given for each of the preceding
These cover virtually every sector of
ten years, so trends can be recognised.
industry and include a variety of quite
detailed information on UK production.
BBC Data Enquiry Service
This is a personal information service Guide To Official Statistics
drawing on the world-wide resources of the
This is the main guide to all Government
BBC. It is an inexpensive and easy way of
produced statistics, including ad hoc reports.
checking facts and drawing on a statistical
data bank which covers people, products,
Key Note Publications
countries and events. You will be charged
for enquiries. Over 100 market sectors are covered. These
are comprehensive reports containing a
British Rate & Data (BRAD) detailed examination of the structure of an
industry, its distribution network and its
This lists all the newspapers and periodicals
major companies. They include an in-depth
in the UK and Eire which carry advertising.
analysis of the market covering products
It gives their frequency, circulation volume,
by volume and value; market shares; foreign
price, executive names, advertising rates
trade; an appraisal of trends within the
and readership classification.
market; a review of recent developments
within the industry; a financial analysis of
Business Monitors
named major companies; and an appendix
This is the medium through which the listing further sources of information, recent
Government publishes the business statistics press articles, other reports and journals.
it collects from UK firms. The Monitors can

P 105

Kelly's Manufacturers Overseas Trade Statistics
And Merchants Directory
Published by the Department of Industry
This directory has an alphabetical list of & Trade, these provide a monthly statement
manufacturers, merchants, wholesalers and of UK imports and exports by volume
firms. It gives basic information on each. and value for each product group and
In addition, entries are listed by trade individual country.
classification and it has a section listing
British importers and what they import. Reports Index
Exporters are listed by the products they
This is an index of reports in every field
export and the countries in which they sell.
published and available for sale. Its sources
include Government publications, HMSO
Kelly's Regional
and other market research organisations,
Directory Of British Industry
education establishments etc.
This is published in eight volumes and
provides a town by town guide to industry The Retail Directory
and the products and services offered.
This gives details of all UK department
stores and private shops. It lists the names
Key British Enterprise
of executives and merchandise buyers as
This contains information on the key UK well as basic address information.
companies that are responsible for 90%
of industrial expenditure. Each entry gives Specialist Libraries
basic information on the company, but also
Apart from your local library, there are
branch addresses, products by SIC codes
hundreds of libraries connected with
(Standard Industrial Classification code),
Government departments, major industrial
sales turnover and directors names etc.
companies, trade organisations, research
centres and academic institutes.
Kompass
Two publications that list these specialist
This is published in two volumes. Volume 1
libraries are:
is indexed by product or service to help you
. ASLIB Economic And Business
find suppliers and indicates whether they are
manufacturers, wholesalers, or distributors. Information Group Membership Directory
Volume 2 gives basic company information www.freebizinfo.org
on the companies identified in Volume 1. . Guide To Government Departments
And Other Libraries
Office Of Population, Census And Surveys
This office produces demographic statistics
for each county in England and Wales from
the census. They provide data not only on
total populations in each area, but also on
occupations, economic groups etc.

P 106

ANALYSING THE COMPETITION
Do not assume you have no competition - somebody will possibly
be offering similar products and services.
Be objective : acknowledge if a competitor is good.

Use this grid to analyse the competition

Name Better Or Worse What Is The Main How Is Their Higher, Lower
Location? Selling Point? Service Or Or Comparable
Product Better Prices?
Than Yours?

P 107

Look at your findings.
What are your competitor's strengths and weaknesses compared with yours?
How will you compete with them in the market?

P 108

THE SWOT ANALYSIS
A SWOT Analysis is a way of understanding and organising
information about both your organisation and the environment.
It focuses on what is important and excludes what is not.
Unlike market research it requires you to make decisions about
information: what is important and what is not, what affects
you and what does not, what weight you will give to particular
problems or situations, what you will do about them.

A SWOT Analysis is also used to assess Weaknesses
information about competitors. What are . Can you exploit poor quality or low
their strengths and weaknesses? What
appeal? Why do these conditions exist?
opportunities are they able to make use of?
Is low quality a weakness (check quality
What are the threats to your competitor’s
-price relationship)?
business and how would they be able to
. Is there demand for different products?
respond to these threats. What threats could
you generate? The kinds of information you Does the range match demand?
need to collect and analyse are: . Is the price too high or low? Is the
pricing strategy per product correct?
Strengths
Does promotion strategy match the
. Product quality and customer appeal profile, product and price? Where is
. Product range the product sold and is it an effective
and accessible location?
. Market mix: price, product, promotion
. Is purchasing casual? Has poor
and place
availability, quality, or reliability
. Personnel: skills, costs and flexibility
affected customer loyalty?
. Location/accessibility
. Is the competitor well-known?
. Reputation and customer loyalty Does it dominate?
. Market position . Is it cash-rich, or have a strong asset-base?
. Resources: money, skills, information Can it raise money easily? How well does
it use resources?
and communication

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Opportunities
. Can you introduce new products or W : Weaknesses
remarket existing ones to seem new? . What you don't know or don't do well
Is there a gap in the market?
. Things which hold you back
. Can you sell more cheaply? Can you offer
e.g. lack of certain skills
a better product-price mix? Are your costs
lower? Or production methods more . Poor marketing or sales techniques
efficient? Do you have spare capacity?
. A poor or over-priced product
. Do you have resources that can be used
. Lack of experience in business
or used more efficiently?
or this field of business
. Are there opportunities to co-operate?
Or joint market?
. Is the political, economic, social, or
technological environment changing O : Opportunities
to your advantage?
. Changes in the business environment
Threats giving you an advantage
. Can your competitor offer better quality,
. Market opportunities
lower price, better marketing, or a higher
e.g. a rival business closing
’added value’?
. Will legislative, political, economic, . Untapped demand for a product
or service
technological, commercial, personnel,
resource level, or financial changes . A possible new business relationship
threaten your market?

The SWOT Analysis
T : Threats
. Sudden changes in the business
S : Strengths environment e.g. price rises or
. The things you are good at
new regulations
e.g. marketing or teamwork
. Inability to respond to/cope
. The things on which the business relies
with change
e.g. good design skills or lower prices
. New competitors or better products
. The advantage you have
you can't compete with
over competitors
. Relying on one or only a few
. The resources available to you
customers for your income

P 110

SWOT Analysis

Date:

Under each heading list the main things that apply to your proposed business today.

S : Strengths

W : Weaknesses

O : Opportunities

T : Threats

P 111

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