. li : ICtion, ee ee List your results a oa the eau e f research collection, presentation fianalysis of information relating to the tet and consumption of goods ang ries TO IDENTIFY al A business will a UNDERSTAND CUSTOMER NEEDS. ; e More successful if it can supply products that meet eisiomers Needs. This means that a business has to gather information to ntify these needs. For example, a vacuum cleaner manufacturer will need sumption act of buying and using to find out which product features are important to potential customers. These pads might include: urability staying in good condition for a long time, even if used a lot Tees model design and style colour durability efficiency/performance ease of handling ease of storage.‘A Avacsum cleaner anticipate to expect that something wil happen and be ready frit BRAT idee mater available but has not yet been exploited once tis data nas Bon at nce ti eos of customer tne epesipo as detaled as POS If possible, business try to predict what customers Wat ‘Quickly. Businesses operate i”? cop up with the latest trends, fashions rod, 2 Oi gathered by market researc ses need to anticiP: an design product tha pusiness can design & Product hat ng jble. rate customer needs. This means th nie Fadvance and respond to changes yey May changing environment and have g ove technology and design. TO IDENTIFY GAPS IN THE MARKET Ifa business can spot a 9 ‘edge fora while. t may be able t profit before a competitor arrives ‘gathering information from peoPh h gather gory a problem that sufficient people are having al require Mr the market itis ikely to gain a competing fo generate higher levels of revenue and Finding untapped markets is not easy by ie might help. For example, market researc 2 oe Tarn of anew product, People will nearly always 100k fr ety, solution in the form of a KEES astr anc sarior ways to com ‘gaps. For example, mapping aPPs ete everyday tasks. New apps might il susp ' help to solve the problem of find aps, For exe, Poy apps are designed to peed up access oa way in ait pas saves tie for poop, which s valued TO REDUCE RISK ‘Setting up a business or launching 19 a new product is risky. As markets get larger, and as competition gets fercer, launching new products becomes feven riskier. The likelihood of fallure is high but investment in effective marke research can help reduce the risk of fallure. There are many examples of cost product failures that may have resulted from misreading the market or fai to cary out effective market research. One such product is the Amazo’ Phone. Amazon, which has a very Phone in 2014. However, about a Sales did not meet expectations a million. The mobile phone market powerful brand name, launched the Fic year later it was removed from the market ind it cost the company at least USS170 is highly competitive, making it difficult for ‘new products. Some customers also felt that the phone's design was too focused on the sale of Amazon's own services and that the price was wrong, TO INFORM BUSINESS DECISIONS Businesses have to make countless decisions and generally the quality of decision making can be im proved ff managers an information. Market research can : Beat Could be used to improve det ‘marketing decisions. For example, by a business is what price should example in the box. cision PRICING DECISION er cent, The cut is shown below, offect ful Provide a wide range of information that making ~ particularly when making ‘one of the most important decisions mad® be charged for a product. Look at the " i 0 esta” rice to USS per unt. After Lone: it discovered that sales woud ‘on total revenue of the planned price sereMYainausss ipnayor fil research gathering of Jy information that does not already Jargon words and expres ‘patcular profession or BY 2 When P = Ussi ©. TR = US$10 x 1500000 = uss1s000000 When p= = US$8, TR = USS13 ago 08 T= USS8 x 1680000 1500000 + 12 per +12 per cent) Conseq ently, the busin Planned poy resuraames ound ou trough mare eearch tat reduce reveru from USS15000000 to Us$13.44000 avoided, > AS 2 Fesult, the plan was abandoned anda drop Basesses use Primary ofl research to athe infomation tat oes Peer rr. The main advantage of primary research is that it is original ‘and the es icting primary research is often time consuming and expensive. ‘Some QUESTIONNAIRES ‘A questionnaire isa list of w market research and are use respondents. A good questionn xitten questions. They are very common in 1 t0 record the views and opinions of aire will hve the following features. im Abalance of open and closed questions. Closed questions allow ‘Repondents a limited range of responses. An example woud be: iow Tmany tes have you flown with Emirates tis year?’ The answers 0 Tjased questions are easier to analyse mathematically. Open questions ‘or people cay whatever they want. They do not have to choose from 2 fet ret Beponses. Open questions are best used if there isa large numbet of er eto esponses. An example would be: How would you improve the Gualty ofthe service provided by Emirates?” deattin clear and simple questions. Questions must be lear, avoiding the use of jargon, poor grammar and bad spelling, tee etistain leading questions. Leading questions are those that ‘suggest so ein answer, They should be avoided because otherwise the results atte biased, An example of a leading question would be: ‘Do you have any problems with this product?” fm Ba short fquestionnaites are too long people may be reluctant to answer them, or may stop part way through. ‘Questionnaires can be used in different situations. are sent out to people by letter and nin their own time. They may be more im Postal surveys: Questionnaire festionnares are never returned. they are asked to complete ther ‘convenient for people but the majority of au ‘This means that resources are wasted. in Toleshone interviews: The main advantage of interviewing People srarettenene is tat itis cheaper. A wide g2ograpical area can S006 oe rel. However, some people do nat like being phoned by businesses. 1a Poreakal interviews: These aro often cared out inthe steet or on he Fecrtop, and the interviewer ils in the answers. The advantage hatBoudin consumer panels groups of customers are ‘asked fr feedback about products over a se period ID You KNow? Online surveys may be more sophisticated because they can use a wider range of images. They are cheaper to administer and can be made available to respondents 24/7. However, many people still ‘ignore them, oe tained if a respondent is y 88 cece ee a oe aN being approached ine Beto computers INcreases AFOUNd the Wor, gs As access 10 1 Online survey ao surveys. These are similar to postal surveys F028 ne org be directed to a questionnaite aff" reclving an ema} ‘confirming an onlin transaction, for example, IR CONSUMER PANELS FOCUS GROUPS OF eo cna rfornaton fom customers right we cus groups or consumer panels. A focus group is where a number of cuntorvore are ved to altond a discussion led by market researcher, “The group must be representative ofthe whole population and be prepared to answer detailed questions. This Is a relatively cost-effective method of Callecting information but the group may be small so generalising from the results may not be reliable. OBSERVATION This is where market researchers ‘watch’ the behaviour of customers. This ‘approach might be used in retail outiets. Observers might record the amount of time customers spend looking at particular products and displays in the store. However, because there is no feedback using this method a lot of ‘questions may go unanswered. The observers do not ask customers to expan reasons for their behaviour TEST MARKETING ual This involves selling a new product in a restricted geographical area to test ; it and sales levels before a national launch. After a set period, feedback is {gathered from customers. The feedback is used to modify the product before the final launch. This reduces the risk of failure, aneUSL Ma SUN sores avy family Over £300 to 90 for Gest reasons why th 5 je number of visitors "Ars. Give at least two reasons in your analysis. Busine SSeS Use seq ca ‘ondary or desk itn research to coll fern exis, has been Colones oe ollect information that 2r8, The eon Collected by someone else and may be avaliable info already exists inion ration Collected may be internal, which means that it exists outs ide the secondary age he busin business. it may . It may also be external, which means 1eSs. Figure 33.5 shows some different sources of Secondary data may he peach s ducker and easier to gather, For example, intemal beoterea ae lately available on internal company networks. Also, a research ie wiiata i avilabe onine. However, the main problem with desk pester 'e data collected might not be exactly what the business . It may also be out of date and therefore inacourate. Some of the data gathered by market researchers is qualitative data. This means that the information is about the attitudes, beliefs and intentions of consumers, It is usually written down in words or recorded ~in a video clip, perhaps. Focus groups, interviews and social media can be used to gather Qualitative data. Consumer messages on social media about a new product ih the market would be an example of qualitative data. Although qualitative data can be quite detailed, which is useful, itis also open to many differentirene ae. amet tate eematonbateanbe) statcticaly than quanttative data vad, hati 4 in ub . a ed, thats, exoressed in numbers . - Quantitative data i exprossed in numbers and can be measured. This usualy ‘means that market researchers collect statistical data, such as sales figures {and market share. Surveys and goverment publications are common Souteas of quantitative data. Quantitative data is often easier to gather, process ang Present fo reader. It's also regarded as being open to less interpretation than qualitative data, eran) POM aaa GSLs Social mea is paying an increasing role in marketing. Businesses use soci med lator and bogs togater Wfermates se nei Brovidea cheap way of gathering information about a fms custorers Imarkt, rand appearance and other marke issues, For example, Met sock nod patorms ofer numerous ways to analyse trends and condet renee some ange Searching the aes posts and popular terms, iti possbe sgn sooctiralanding of emering wends and soo what customers a akg soning ale, One exampe of his is conducting hashtag seals a pret resenaches with hashtags related toa spect bran, ney coma hstantroticatons canbe received when custorreny eo they can emp ses: Qt fn the interaction i tod by been of erean Sly observe or join in a an equal. This can respec variety roar ant stove hat might have remained fidcon oe mela for nea able 2.1 summarises the advantages of oe media for market research, eo ceera sel Table 39.1 Advantages of using scl! media tw awtoteene Broad reach can reach millon of people all aound the world, Abily torarest —Iealows specific groups of people to be rargeted. ees er ccc, Personal Eo communiacon on personal bag with individual ‘customers and groups, Pid options are usually cheap, Fast Information can be collected ve si "Y quickly from large numbers Eay : MSIF land complex cauipment are apcewena:aaa aan i Tau yry ple small group of people, which must proportion ofa total market carrying out market research Although ie Sama Out market research can reduce the risk of products falling in Tesearch data is ine ant 10 ensure thatthe data gathered is reliable. If market are likely to be ure ount® OF Out of date, any decisions based on the data on the number of unt. The reliability of market research data often depends of everyone, neg peghle auestioned and whether they represent the views ina market, Hen information could be gathered from every single person ‘overcome this seve" this would take too long and cost too much money. To MUCH erate Problem, businesses use a sample of people. A sample Is a Smaller group, however, so the behaviour and views of the sample must be representative of all the jis : © people inthe market, oth biased and unreliable. i r ee aes A business should also appreciate that human behaviour is unpredictable. Atthough people may indicate their intentions in a questionnaire, what they Go in reality might be quite different. People might change their minds or misunderstand the question. They might also give answers that they think. the interviewers wanted to hear. Finally, if questionnaires are poorly designed or interviewers have not been trained, the quality of the research carried out might be poor. These issues must be addressed to ensure the reliably of fata, ea Lees) Market research may be important for businesses of all sizes. However, ‘small businesses are likely to use cheaper methods of research or carry out the task informally ~ such as ‘chatting to customers’. Large businesses may spend considerably more on market research. This may be because they have more resources or they need to access to some important and specific information. Large businesses also have more to lose if they ‘misread’ the market.Mea ran) Goods an serv eode ane services ae sold na market. Amaret exe when ber and soles communica and exchange goods fr mney. str, markt war places where buyers and sles wold meet © exchange goods, ods) 1s Posse to rade good witout buyers and sles ertualy mesing up i person. For exape, radng canbe dane ove he ieprene ung newspaper trough ma ore eon tee. Sre eae of mates iow "5 Consumer goods markets where products such as food, cosmetics, setofarrangements that allows g_ yurifure and magazines are sol. Se calerio communicate and Markets for services — these are varied and could include services for ingoods and services jg MeiNiduae, uch es banking, or business servos, uch a8 cleaning Being cover ve }ousing market ~ where people buy and sell properties. : Bese « Commoctty markets — here raw mater nuh 08, wheat and offee are tradk ‘Marketing involves a range of activities that help a business to sel its products. However, marketing is not just about seling, itinvolves: identifying the needs and wants of consumers designing products that meet these needs understanding the threat from competitors 1 telling customers about products. . . ‘charging the right price persuading customers to buy products m_ making products available in convenient locations. Marketing can be defined as ‘a management process involved in identifying, anticipating and satisfying consumer requirements proftab) Businesses have to satisty customer needs and wants. This means that they Pte to produce goods and offer services that customers are prepared! £0 Buy » at sees identify customer needs by carrying out market research. Market ease ig one of the most important marketing activities it's the fst step in resfatying customer needs, Market research is discussed in Chapter 35 (see saigon 272-201). fa business can gather reliable information fom custo es ‘ble to identify their needs and wants. I they do this accurately ‘they may be at sey Jesign products that meet those needs, they are more likely to Be successful. Breas saad if possible, businesses need to anticipate customer needs. This Means they tty to predict what customers wantin advance and respond to ‘changes very ‘sees operate in a changing compatitive environment and have ci quickly. Busine ce up with the latest designs, trends, fashions and technology, relationships with their customers. This means .d with them through effective communication meet their needs. Businesses can adopt ‘customer relationships. These are Many businesses try to build that they try to establish a bon and do everything possible to 4 number of practices to help bul ‘summarised in Figure 34. es Sad Increasingly, businesses are using social media to build customer rertonships. Many are switching from the historic practice of broadcasting rerexeting messages to having conversations with customers, BusinessesCito Pentru Fire 24.1 Bung relationships with customers wake TLE ‘Once a business has attracted a customer, it is important to retain their loyalty SE retain to keep something or continue to have something Sireeta berg emarer. rk arson es tea $0 that they continue to make purchases in the future. Many previous studies have concluded that the cost of retaining a customer is about 10 per cent of the cost of acquiring anew one — in other words, finding new customers Costs a business ten times the amount it costs to maintain existing customer loyalty. To retain existing customers, a business must continue to satisfy thelr needs by developing new products, providing first-class customer service, maintaining effective communication links, delivering reliability and responding to any changes in the market. Itis also easier to keep customers loyal a, business can develop a strong brand name. Branding (see Chapter 36) and is {mportance are discussed in Chapter 39 (see pages 322-332). Finally, one of the best ways to retain customers isto reward their loyalty. Some examples of customer loyalty schemes are outlined below. REWARD CARDS, CHARITABLE DONATIONS One approach to rewardi defou MAL acu Communication ‘Gomuration en Esto esearch around «Pat oe of consumers wofaide sald hay woul be meelnyal to company pps ‘social or PARTNERSHIP DEALS Some businesses set up deals with other b sane, sith other businesses to share the cost and bene of owen coer vay Ft ‘example, American Express linked up wih te soi med liom Titer, 0a customs ould lnk thei feat cad to Tt nd et deco on carta fers ‘by way of special Stesend oer ee arenes recontly, the two companies set UP sini? venture $o users can buy certain items simply by hashtagging tweets Inthe past, many businesses were product oentatod Tis Tet that Inthe a rere more concerned about the gua of her proce Their busine tated on te design and manufacturing of fe Pe itso. rey ten tied to persuade people to Puy. Some oan today are stil product orientated. For example, inthe pharmaceuticals industry, companies rod prizer and Bayer focus most of thei attention 08 1 development of such Oo and medicines. Tey already know that €need nists Incontrast, most firms today are market orientated. They are led by the mrarket and their focus is on the custornes “They do not make products until matteo what people want. Maet-oerttes firms spend a lot of theirTau n ura ANALYSIS rey oe oe oo Hi vmo Mota ‘A Figure 34.2 Peto stations in Konya - 2015 ‘marketshare ‘marketshare proportion of sales in a total market that a business or product enjoys ‘market analysis quantitative and ‘qualitative assessment of a market ‘niche market smaller market, usualy “within a large market orindusty Man nunc MARKETING deel aa cae reviewing and analysing the needs of time and resources of eee aot of importance 1 market research, Thy customers. Asa result, they attach is discussed in Chapter 33. 1 interested in their market share. This is the share of, til nan hte pericuar buses o oat ony. The cha Pte cower sara pt BU Kya tr ino ipl Teal Yo an Kero, comnat the ele mare: Betien than ty supply 2 percont fh matt. The fourth rst supp ratte Oya nh 2 pa cnt sare, Busnsaee oe am 1 rreae their market share at the expense of rivals. If a firm can dominate the market, itmay be abe fo charge a higher price. The formula BelOW can Be Used to calculate the market share of a business or product: Total product or business sales, 499 ‘Total sales in the whole market (arti wie involves finding out about the features or characteristics of a market. A business may gather both quantitative and qualitative information when Iseescig ft met Foreragte ftw bc hnoful te businene ean RA Market share = the size of the market | the current growth rate in the market and the potential for future growith the number and size of businesses currently operating in the market the factors that might influence possible changes in the market — these might include social, political, technological, environmental and economic factors the possible costs and potential profitability in the market portunities for segmenting the market (market segmentation is discussed in Chapter 35 (see pages 292-297) '= the way consumers behave in the market, such as where they lke to buy Products and how they like to use them, Ideally, market analysis should be ‘means the 19. Manufacturers in the industry will have to ensure that more of thelr models can run on electricity them in the same way. fast cereals, confectionery ber of customers in theseformance, quali eaten, group, sometimes with specific needs. Small firms can often survive y Supplying niche markets. They can often avoid competition. Itis also a lot easier to focus on the needs of the customer in a niche market. Examples of niche markets might include graduation gifts, dog training, wedding planning and BBC Radio 3 (which mainly broadcasts classical music). Most markets do not remain the same over time - they are not likely to be static. They are dynamic, which means they may grow, shrink, break-up and ‘emerge. Some markets can completely disappear. For example, in the USA, the market for frozen concentrated orange juice has almost collapsed. One reason is because Americans are drinking less orange juice. However, another is because those that continue to drink orange juice prefer freshly squeezed juice. At the beginning of the 1980s, the two forms of juice were drunk in roughly equal quantities. Today, Americans drink 1.4 million gallons of frozen concentrate per month compared with 19.1 million gallons of fresh juice. CHANGING CUSTOMER NEEDS One of the reasons why markets change is because the needs of customers change. These needs change for a number of reasons. = Consumers’ incomes change so they choose different products. For example, there is rapidly growing demand for cars in China and India as people become wealthier. 1m Gonsumers become better educated and more sophisticated. Owing to improvements in communications and the greater availabilty of knowledge, people are more aware of opportunities and have developed more sophisticated tastes. For example, many consumers prefer to buy ‘expensive smartphones that can meet a wide range of needs.pr ne aac 1es in social habits. For example, more by chandr nment and resource depletion ang influenced Consumers are nema ea Roce ots mtg, nt by en eae eds. For example, people now war manatee : = Sergent eco ! Titian marco eri oy Snes Saran on rivals. CHANGING CUSTOMER/CONSUMER SPENDING PATTERNS Businesses can gather information about spending patterns in markets. They can carry out their own research, use statistics generated by the government or purchase market research reports from specialist market research agencies, such as Mintel. Businesses are most likely to be interested in spending patterns in those markets in which they operate. However, they may also be interested in global spending patterns or spending trends in a particular country. Figure 34.3 shows that consumer spending in Canada has risen steadily in the last five years by about 10 per cent. A business that was considering entry into the Canadian market is likely to be encouraged by such information, 1 c20000 ‘= 1000000 Zoo J 8 s20000 § o10000 B cxocoo — 0000 zor 2ors a Year INCREASED COMPETITION Competions the {valy that exists between businesses in a market. It would isiness to operate in a market where th: The behaviour of competitors in the market be naniored say ail needs to be monit Carefully. For example, the arrival of a new dees xample, competitor could have a dramatic effect on sales if their otk aa atc on Products are more advanced or more effectively ee oe A PUTS BUSINESSES UNDER SOME PRESSURE 2 pr rar el ‘competition means that businesses have to encourage catomers uy their products in preference to those of rivals. They will US Tange of methods to attract customers, such as: eeaA eG Cau @ lowering prices > making their products appear different to those of rivals offering better quality products @ using more powerful or attractive advertising or promotions offering ‘extras’ like high quality customer service. All of these methods cost money and generally reduce the amount of profit a business can make. However, businesses have to use such methods in order to survive in the market. Finally, if businesses do not respond to market changes, they are likely to lose market share. At worst, they could collapse. A couple of years ago, it was reported that Tesco, the UK supermarket chain, was losing market share to other supermarkets. There were a number of reasons for this but several reports suggested that they were failing to meet customer needs. They were losing market share to the cheaper stores, such as Aldi and Lidl. There was a need for Tesco to adapt quickly, or risk losing more of their market share. Tesco responded by investing £1000 million in refitting some of its stores, increasing staff numbers to improve customer service and cutting the prices of more than 30 important goods. LARGE VS SMALL BUSINESSES Marketing is important to business of all sizes. Failure to recognise the importance of marketing may mean that a business struggles in relation to its rivals. A business may even fail owing to poor marketing. However, larger businesses, with their depth of resources, are likely to invest more in activities such as market analysis and market research. Some large businesses may employ specialist companies, such as market research agencies, to carry out work on their behalf.