Why is market research needed?

Any business should find out what people want to buy and how many people are going to buy that product before producing a product since the chances of failing are very high. Usually, market research try to answer these questions:

  • What feature of the product do they like/dislike?

  • Are people willing to buy the product?

  • What price are people prepared to pay?

  • Location of the selling point of the product.

  • Type of customer who buys the product.

  • Type of promotion that will be effective.

  • Competition in the same industry.

Businesses need to know these things as well as consumer wants to be more competitive. There are two main types of information that can be gathered from market research:

  • Qualitative information: information where opinion or judgement is necessary.

  • Quantitative information: information about the quantity of something.

There are two ways to gather any information for market research:

  • Primary research or field research.

  • Secondary research or desk research.

Primary research

Primary research is gathering original data which may require direct contact with customers. There are several ways to do primary research:

  • Questionnaires

  • Interviews

  • Consumer panels

  • Observation

  • Experiments

NoteQuestionnaires, interviews and consumer panels are all types of surveys

The process of primary research

  1. Identify the purpose of the market research.
  2. Decide on the best method of research. (primary, secondary or both)
  3. Decide on the size and type of sample (group of people who will be asked)
  4. Carry out the research.
  5. Collate data and analyse results.
  6. Produce a report. (may include recommendations of action paths to take)

Methods of primary research


Questionnaires involve asking people questions. Deciding what questions to ask since sometimes questions may mislead people and make them answer what they don’t really think.


  • Detailed qualitative information can be gathered.

  • Customers’ opinions can be gathered.


  • If the questions are bad it could mislead customers.

  • Takes time and money to collate the results.


Interviews are face-to-face conversations with customers where the interviewer has a set of

prepared questions.


  • The interviewer can explain any questions the interviewee does not understand.

  • Detailed information about customers’ opinions


  • Interviewer bias. The interviewer might unconsciously lead the interviewee to answer in a certain way.

  • Time consuming and expensive


  • group of people who are chosen to do market research on. There could be:

  • Random sample: A random number of people are selected.

  • Quota sample: People are selected for some certain characteristics

Consumer panels

Consumer panels are groups of people who agree to provide information and spending patterns about a product. They may even test it and give feedback on likes and dislikes.


  • They provide detailed information about a product.


  • They can be time consumingexpensive, and biased if opinions of some is influenced by others.


Observation involves:

  • Recording: e.g. meters can be fitted to a monitor to see what people are watching.

  • Watching: e.g. see how many people go into a shop and actually buy something.

  • Audits: e.g. counting inventory to see what has sold well. (inspecting)


  • It is inexpensive.


  • Only provide basic figures and not reasons why people do things.


Experimenting involves giving products to consumers to see what they think about it.


  • Easy to set upcarry out, and gather consumer opinions


  • People might give wrong feelings to avoid offence.

  • Representatives of samples may not be asked, just people who shop in an area.

  • Many potential customers may not be asked.

Secondary research

Secondary research means taking information that has been already collected by others.

Internal sources of information

Data collected from past researches could easily be used again if it is needed. Examples of internal sources of information include:

  • Sales department: sales records, pricing data, customer records, sales records.

  • Distribution and PR personnel.

  • Finance department.

  • Customer service department.

External sources of information

Data collected from sources outside the business. The data may still be useful but there are many

limitations since it has been gathered for other purposes. Sources include:

  • Internet: gives all sorts of information, but the info must be validated.

  • Trade and employer associations: gives info about things in an industry.

  • Specialist journals.

  • Research reports.

  • Newspapers: about the economy and disposable income of workers.

  • Government reports and statistics: contains things such as age groups and culture.

  • Media reports.

  • Market research agencies’ reports: detailed reports on the economy. Expensive to buy.

Secondary research is often a much cheaper way of obtaining information. It also gains access to data which cannot be gathered by primary research such as government issues or the economy.

Who carries out market research?

Normally, research is done by any business who needs it. In smaller businesses, owners use secondary research since they cannot afford to conduct primary research. However, if a business has enough money, it can afford to have a specialist market research agency to do the research for it.

Accuracy of market research information

The accuracy of market research depends on how the research was conducted and how carefully samples have been selected. Here are some ways to make information from market research more accurate:

  • sample needs to be truly representative of the total population, hence a quota sample is normally used.

  • The larger the sample, the more accurate the results.

  • Questionnaires need to be tested on a small group of people to see if there are misinterpretations. The questionnaires will be modified to be as clear as possible.

Concerning secondary research, there are a few problems with it:

  • Data collected by others may not be accurate since it was used for other purposes.

  • Data can be out of date.

All in all, it must never be assumed that information collected from market research is completely correct.

How to design and use a questionnaire

Firstly, you need to ask yourself some questions:

  • What do I need to find out?

  • Who do I need to ask?

  • Where will I carry out my questionnaire?

Writing the questions

    • Ask no more than 12 questions. (impatience)

    • Make the questions simple. The answers should be simple enough to collate. (e.g. Yes/No answers)

    • Use choice of age groups.

    • Avoid open-ended questions.

    • Avoid misleading the interviewee with questions. (don’t want to cause offence)

    • The order of the questions should be logical.

Carrying out the questionnaire

First you need to figure out:

    • How you will ask the questions.

    • How you will collate the results.


    • Where are you going to ask the questions.

    • Who are you going to ask?

And finally:

    • How many people will be asked?

    • When will you ask the questions? (time)

Analysing questionnaires

Analysing the results should be straightforward if you have easily collated the data. It simply involves reading the answers and thinking about what they mean. It takes practice.