Elements of Market Research (Leaving Cert Business): Revision Notes
Elements of Market Research
Market research forms the foundation of successful business decision-making. Understanding its key elements helps businesses identify their customers, reduce risks, and develop effective marketing strategies.
What is market research?
Market research is the systematic process of gathering, recording and analysing information about different aspects of the marketing mix. The goal is to identify and satisfy customer needs in an informed and effective manner.
This process serves two important functions:
- Risk reduction: Market research reduces risks when introducing new products and helps minimise development costs
- Market understanding: It provides valuable insights about customer preferences, market trends and competitive landscapes
Market research can happen at different stages - before a product launches to test market demand, or after launch to gauge customer reactions and identify areas for improvement. This flexibility makes it a valuable tool throughout the entire product lifecycle.
Aims of market research
The main aims of market research can be remembered using the framework S-N-C-P-F:
S - Strengths and weaknesses
Market research helps identify the strengths and weaknesses of specific products or services. This analysis reveals what works well and what needs improvement.
N - Needs identification
Research helps determine whether a market exists for a particular product or service. It examines market characteristics like size, geographical location, age demographics and social status to understand if there's genuine demand.
C - Consumer and competitor analysis
- Consumer research: Businesses discover why consumers buy particular products and what influences their purchasing decisions. This helps firms identify the most suitable marketing mix for their target audience.
- Competitor research: Companies can assess their competitors' strengths and market share, whilst identifying weaknesses they can exploit to gain competitive advantage.
P - Promotion and product testing
- Promotion: Finding the most effective advertising methods for reaching target customers
- Product names: Testing different product names to see which resonates best with consumers
F - Future trends
Research examines factors like economic outlook, legislative changes, taxation and income levels. This forward-looking approach helps firms accurately assess potential market impact.
The S-N-C-P-F framework provides a comprehensive approach to market research planning. Each element is essential for building a complete understanding of your market environment and making informed business decisions.
Target market
A target market represents the specific group of consumers with common needs and wants that a business directs its products or services towards.
Types of target markets
Niche markets are specialist markets with typically small numbers of suppliers due to their specialised requirements. These markets are often identified through market segmentation based on socio-economic class, geographical area, or other specific characteristics.
Example: Niche Market Identification
The market for bridal shoes represents a niche market with very specific requirements and occasions. In contrast, the broader market includes environmentally-conscious consumers who prioritise products that minimise environmental damage - this represents a much larger but still targeted segment.
Market segmentation
Market segmentation involves dividing the broader market into clearly identifiable sections with common characteristics. This process allows firms to identify exactly who their target market is.
Why segment markets?
Within broader target markets, consumers have different profiles, creating various groups or segments. Each segment has distinct needs, incomes and characteristics, requiring tailored marketing approaches.
Common segmentation methods
Demographic segmentation: Based on characteristics like age, income, gender and occupation. For example, Cadbury targets Dairy Milk Buttons at children, whilst The Clock restaurant targets adults.
Geographic segmentation: Based on different geographical areas or regions. The Clare Champion newspaper targets local customers in County Clare.
Psychographic segmentation: Based on beliefs, attitudes, lifestyles and values. For instance, people who buy only organic products or green consumers who purchase from environmentally responsible firms.
Each segmentation method offers different insights into consumer behaviour. Many successful businesses combine multiple segmentation approaches to create detailed customer profiles and more effective marketing strategies.
Benefits of market segmentation
Market segmentation provides three key advantages:
- Increased sales: By creating products that specifically meet entire target market needs, companies can boost customer loyalty and sales
- Enhanced market share: Establishing diverse brand ranges makes it more challenging for competitors to enter the market
- Reduced costs: Businesses avoid wasting resources on marketing and selling products to consumers who aren't interested in buying them
Case study: Dunnes Stores
Dunnes Stores, one of Ireland's leading food retailers, demonstrates effective market research application through their customer loyalty campaigns. They launched a programme offering €10 vouchers to customers spending €50 or more, which proved highly successful over recent years.
Case Study Analysis: Dunnes Stores Market Success
Market research insights: Retail analysts suggest Dunnes has become the most popular grocery retailer in Ireland for a significant period. Recent data shows their market share increased compared to competitors like Tesco (22.5%) and SuperValu (20.8%).
Strategic investment: Dunnes invested substantially in advertising campaigns featuring the character Bill, advertising Double Savers across multiple media channels including TV, radio, social media and in-store promotions.
Customer focus: The company maintained focus on providing customers with 'Better Value', whilst demonstrating awareness of external economic challenges.
This targeted promotional approach helped Dunnes retain existing customers whilst attracting new ones simultaneously, demonstrating how market research insights can be translated into successful business strategies.
Summary
Key Points to Remember:
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Market research systematically gathers and analyses information to identify and satisfy customer needs effectively
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The S-N-C-P-F framework covers the main aims: Strengths/weaknesses, Needs identification, Consumer/competitor analysis, Promotion/product testing, and Future trends
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Target markets are specific consumer groups with common characteristics that businesses focus their efforts on
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Market segmentation divides broader markets into identifiable sections using demographic, geographic, or psychographic factors
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Effective market research reduces business risks, increases sales potential, and helps companies make informed strategic decisions