Marketing: Introduction to market research - CCEA

Key points

Marketing involves:

• raising awareness of a business
• keeping customers informed about updates
• aiming to meet customer needs
• increasing sales

Market research:

• helps businesses understand customer needs
• identifies market gaps
• can reduce risks
• helps businesses make better business decisions

What is marketing?

Marketing is about raising awareness that a business exists and continuing to keep customers up to date about events, offers, new services or updated products.

The aim of marketing is to meet or exceed customer needs and expectations, and so increase sales.

To do this a business must find out what their customers’ needs are. It can find out about customer needs through market research.

When a business wants information about the market or what customers want, it undertakes market research. Market research collects information that might help a business to be more successful and spot gaps in the market.

Why identify customer needs?

One of the aims of market research is to identify and understand customer needs relating to price, quality, choice and convenience. A business must make sure it is providing the right product, at the right price, in the right place, at the right time. By identifying the needs of customers through market research, businesses are able to reduce their level of risk and make business decisions that are more likely to be successful. Customer needs change over time, so it is important for a business to keep up to date and be innovative with its products.

Another purpose of market research is to help a business identify gaps in the market. This is an area where there is demand for a product or service that is not being met. For example, before the first car was invented, an entrepreneur may have noticed that there was a demand to get around more easily and more quickly. Similarly, online music streaming services spotted that there was a demand for more convenient ways to listen to music, so they provided online access to music that could be downloaded. Spotting a gap in the market gives a new business a good chance of success as there will be little competition to begin with.

Market research is conducted to reduce risk and enable businesses to make better decisions.

How do businesses reducing risk?

When setting up a business, entrepreneurs face a huge amount of risk. Often they risk their own money, with many businesses failing within the first year. By undertaking market research, entrepreneurs are able to reduce this risk.

Market research enables entrepreneurs to find out information, such as:

• what customers want
• what needs aren’t currently being met
• how much competition there will be
• what target market the business should aim at
• how much the business should charge for its product or service

How do businesses make better business decisions?

A business may undertake market research to help it make better business decisions. A business may want to make a change to a product, add a new product to its range or change its location. Before it does so, it may want to find out whether customers will respond positively to the change. For example, before bringing out a new type of coffee, a cafe might conduct market research to find out whether its customers would buy it. By doing this, the cafe can see whether the change is likely to be a success.

Making informed decisions gives a business a higher chance of being successful.

Final checks