HL2 MARKETING THEORY: QUANTITATIVE MARKET RESEARCH

1. HL2 MARKETING THEORY:QUANTITATIVE MARKET RESEARCH IB BUSINESS & MANAGEMENT A COURSE COMPANION

2. INTRODUCTION TO QUANTITATIVE MARKET RESEARCH • Quantitative market research aims to collect large amounts of data that can be analyzed to identify trends. • Surveys often ask long lists of pre-set questions with a limited choice of answers. • These are fed into a computer for statistical analysis of the results. • Given that it is impossible to survey the whole population, quantitative market research is usually based on a representative sample.

3. Different methods of conducting a Sample Survey: • Random Sample • Stratified Sample • Cluster Sample • Snowball Sample

4. RANDOM SAMPLE • Trying to get a sample of a cross section of society. • This is harder than it sounds, as the time and place that you carry out your survey will have a huge effect on who takes part. • Eg: Doing your survey at 10am, will rule out the majority of those people who are in full-time work. • As a result, random samples try to target people based on lists, such as one in every hundred names on the register of voters. • The problem with this is that it takes time to contact those people and it is therefore an expensive method of sampling.

5. STRATIFIED SAMPLE • Certain products are clearly targeted as certain groups. • Eg: A company that makes electric shavers will only be interested in men who shave. As a result, women, children and bearded men can be ignored. • Once you have identified your key characteristics, you could try randomly to pick people who meet these pre-conditions (this is know as selecting a stratified random sample)

6. CLUSTER SAMPLE • This is a very specific survey. • The is not commonly used by large businesses • Small businesses based in a local area, (eg: restaurants, may want to focus their market research in a specific location. • Surveys of local tastes and preferences would be of more use to them than a general survey based on the whole population.

7. SNOWBALL SAMPLE • This involves using a group of targets to recruit future subjects for sampling. • It is a very low cost method of sampling and links in well with technology such as social networking sites. • It is of particular use when trying to get data from subjects who may not be keen to respond to more traditional methods, for example drug users or workers in the sex industry. • However, because respondents are recruiting their friends, it is strongly subject to bias and results must be treated with caution.

8. QUANTITATIVE MARKET RESEARCH • Irrespective of the method of sample chosen, it is important that the sample is big enough to be representative of the population chosen. • The greater the sample, the more confidence a business can have that its results are reliable. • If a company asks only 20 people their views on new package for its product, it may find that 15 of them like them. • However, it would be a huge leap of faith to assume that this means that 75% of the population like the new design.

9. QUANTITATIVE MARKET RESEARCH • Basing marketing decisions on a small sample runs the risk of getting key decisions on the marketing mix wrong, which can have disastrous effect on sales and profits. • You would therefore assume that businesses run huge samples to be as sure as possible, but the key limiting factor is cost. • The larger the sample, the more it costs the business to carry out the research. • As a result, businesses must strike a balance between the cost and effectiveness of their research.

10. What are confidence levels with market research? • Confidence levels are simply a statistical measure of how likely a sample result is to be true for the population as a whole. • For example, a 90% confidence level means that nine times out of ten the findings of the survey will be accurate. • Of course, this means that one in ten will be wrong, but businesses are usually happy to accept a confidence level of this magnitude, given that 100% confidence is impossible unless you survey everyone. • Clearly the larger your sample, the more likely that the survey will give representative results, that is they will have a higher confidence level.

11. QUALITATIVE MARKET RESEARCH • Qualitative market research looks in far more depth at the buying process. • Instead of formulating pre-set questions and answers, researchers will aim to get a more detailed view of consumers behaviour by engaging in open-ended discussion and asking more general questions. • It is important that discussions are carried out by professionals (usually psychologists) in order to be able to interpret findings fully.

12. QUALITATIVE MARKET RESEARCH • Long interviews and sessions with discussion groups take a lot of time and the process is expensive. • However, it is useful for businesses to understand the thought processes behind buying decisions as this can add value and ideas in a way that quantitative research cannot.

13. QUALITATIVE MARKET RESEARCHBias • For both quantitative and qualitative market research, there is always the danger of bias. • Interviewers may consciously or subconsciously lead the person being interviewed in a certain direction. • A dominant person in a group discussion may lead the other participants to that individuals point of view. • The writer of a questionnaire may phrase questions in a way more likely to get one answer than another. • As a result, it crucial for the reliability of the research that a thorough review of the process is carried out to minimize the chances of participants being unduly swayed towards one answer or another.

14. QUALITATIVE MARKET RESEARCHTechnology • Given the spread of the Internet in recent years, market research on a larger scale has come into the price range of many smaller businesses. • It is relatively cheap and quick to send out an Internet Survey, but the above points must still be considered by the business if it is to get useful results. • One of the key issues with Internet-based surveys is the low response rate that can get. • Without incentives to tempt people to fill in the survey (eg: the change to win a prize) it is likely that only a small percentage of people will respond.

15. QUALITATIVE MARKET RESEARCHTechnology • A way that businesses have been trying to get around this problem is by using information that have about consumers to target research more effectively. • Eg: Many supermarkets run loyalty card schemes that record each consumer’s purchases. If a supermarket wants to carry out a survey on ready meals, (eg:Through an email survey) it could target those customers who have previously bought pre-prepared products. • In this way, it would focus on people whose opinions should be useful as they already have some knowledge of the product range. The company would more likely get a higher response rate as the people targeted would feel the survey is relevant to them.