Market research
AQA also says:
Spec content: Purpose of market research (demand, competition, target market); Methods (questionnaires, surveys, interviews, focus groups, internet research, printed press); Use of market research data for decision making.
Students should be able to: understand why businesses conduct market research; understand the difference between qualitative and quantitative research; identify benefits and drawbacks of various techniques and select the best method for a given business; interpret and use qualitative and quantitative findings to help make appropriate decisions; manipulate and interpret data from tables and charts; identify market size and market share.
Why Businesses Conduct Market Research
Market research is the systematic process of gathering, analysing, and interpreting information about a market. It reduces the uncertainty and risk inherent in business decisions by replacing guesswork with evidence. AQA identifies three key purposes:
- Understanding demand — how much of a product customers want, at what price, and how that demand might change over time.
- Understanding competition — who the competitors are, what they offer, how they price, and how customers perceive them relative to the business.
- Understanding the target market — who the customers are, what they value, how they buy, and what would make them choose one product over another.
Primary and Secondary Research
Primary research (field research) collects new, original data directly from customers or the market for a specific purpose. Secondary research (desk research) uses existing data already collected by others — internal records, government statistics, industry reports, published surveys.
| Method | What it is | Advantage | Disadvantage |
|---|---|---|---|
| Questionnaire/survey | Structured set of questions answered by a sample of respondents | Can reach large numbers; produces quantitative data easy to analyse | Questions may be poorly worded; low response rates; respondents may not answer truthfully |
| Interview | One-to-one conversation exploring views in depth | Rich, detailed qualitative insights; can probe unexpected responses | Time-consuming and expensive; small sample; interviewer bias possible |
| Focus group | Small group discussion facilitated by a researcher | Generates in-depth qualitative insight; group dynamic can surface ideas individuals would not mention alone | Small sample; one dominant participant can skew results; expensive to organise |
| Internet research | Online surveys, social media monitoring, website analytics | Fast, cheap, large reach; real-time data available | Sample may not represent the whole market; data quality can be variable |
Secondary research uses existing data: company sales records, government statistics (ONS), industry reports, newspaper and magazine articles, competitor websites, and published market research reports.
Advantages: Fast and cheap — data is already available; large datasets that would be impossible to collect independently; provides historical context and trend data.
Disadvantages: May not be specific to the business's exact question; data may be out of date; may not be available for niche markets; quality and accuracy cannot always be verified.
Qualitative vs Quantitative Research
- Qualitative research explores why customers think and behave as they do — opinions, motivations, attitudes, feelings. Methods: interviews, focus groups, open-ended survey questions. Produces rich, descriptive data but from small samples that may not be representative.
- Quantitative research collects numerical data that can be measured and statistically analysed — how many, how much, what percentage. Methods: large-scale surveys, sales data, market share figures. Produces data that can be generalised across the market but may miss the nuances behind the numbers.
Market Size and Market Share
Market size is the total value (or volume) of sales in a market in a given period. Market share is the percentage of total market sales held by one business.
Market share (%) = (Business's sales ÷ Total market sales) × 100
Market share data enables businesses to assess their competitive position, track whether they are growing or declining relative to the overall market, and benchmark against competitors.
Key Takeaways
- Market research reduces risk by replacing assumption with evidence about demand, competition, and the target market.
- Primary research collects new data (surveys, interviews, focus groups); secondary research uses existing data (reports, statistics, company records).
- Qualitative data explains why; quantitative data measures how much/many.
- Market share (%) = (Business sales ÷ Total market sales) × 100
- The best research method depends on the question being asked, the budget available, the time available, and the level of detail required.