16. Market Analysis
Learning Outcomes from this chapter
On completion, you should be able to:
- Explain the term ‘market research’ and outline the benefits of carrying it out
- Distinguish between the different types of market research
- Evaluate the advantages and disadvantages of market research techniques available to a business
- Define market segmentation
- Illustrate the methods a business could use to segment the market
- Outline the benefits of segmenting a market
- Illustrate what a niche market is and how it would be useful for a business
- Explain the role of the marketing plan for a business
- Explain what the marketing concept is
Market Research
This is the process of systematically gathering, recording and analysing facts about a market to identify and satisfy customer needs profitably in an informed and effective manner.
Benefits of market research
- Collect data about target market
- Collect data about competitors
- Improve product before launching
- Improve marketing mix (4 Ps)
- Predict future sales (break-even analysis)
Field Research (Primary)
Gathering first-hand information and data from the market is called primary research
| Term | Definition |
|---|---|
| Surveys | Interviews/questionnaires of a sample of the target market. Get feedback, habits, attitudes, preferences. Data can be qualitative (opinions) or quantitative (statistics) |
| Observation | Watch consumers interact/behave while shopping or using product (unbiased) |
| Focus Group | Invite potential customers, ask questions and let them chat about their likes and dislikes |
| Customer Feedback | Use comments given to salespeople or machines (e.g. HappyOrNot in Aldi) |
| Personal Interviews | Invite customers to talk about products face-to-face |
| Evaluation | This is up-to-date, relevant and specific – but also costly and can be biased |
Desk Research (Secondary)
Using information and data that has already been gathered is desk research (secondary research)
| Term | Definition |
|---|---|
| Internet | Websites, forums and social media trends provide free data/information |
| Central Statistics Office (CSO) | CSO provides information on market sizes, gender, ages and income levels |
| Reports | Trade associations and interest groups publish research and annual reports |
| Evaluation | This is quick and easy - but may be out of date or not relevant/specific to you |
Market Segmentation
Involves dividing up the market into clearly identifiable groups (market segments) that share common characteristics
| Term | Definition |
|---|---|
| Demographic | Breaks market into groups based on age, gender, family size, income, occupation |
| Geographic | Breaks market into groups based on location |
| Behavioural | Targets people’s reaction to events, times of year, situations (e.g. St Patrick’s Day) |
| Psychological | Targets people’s reaction to products based on social demographic, lifestyle, personality type (e.g. fitness enthusiast) |
Niche Market
A subset of the market (usually small) on which a specific product is focused
Below are factors for a firm to consider when operating in a niche market
| Term | Definition |
|---|---|
| Lower Sales | Lower volumes, lower potential profits/growth |
| Foothold in new markets | Used to establish a brand before expanding a full product range |
| Higher costs | No economies of scale; will need higher quality/USP for higher price |
| Less start-up capital | Scale of production is smaller; option to expand later |
| Less competition | Can sell to a small subset of the market with no direct competition |
Marketing Plan
A marketing plan is a strategy to identify customers’ needs and ways of bringing together the resources required to satisfy those needs in such a way that the business earns a profit
Role: To analyse the market; identify and research the target segment; and then create the correct marketing mix
The Marketing Concept
The idea that a firm should look at the needs of their customers first and make marketing decisions based on those needs to better satisfy their requirements