The Role of Market Research (Cambridge International IGCSE Business)

Spec point — 3.2.1 · "• Market-orientated businesses (uses of market research information to a business) • Primary research and secondary research (benefits and limitations of each)"

What is market research?

• Market research is the objective collection, compilation and analysis of information about a market

• Effective market research will help the business to

  • Reduce risk when launching new products or entering new markets
  • Identify and understand the future needs and wants of customers
  • Understand consumer behaviour
  • Identify how much consumers are prepared to pay
  • Identify potential gaps in the market (market niches) which can be exploited to increase sales
  • Identify competitors and gauge their potential strengths and weaknesses

• With effective market research businesses are well-placed to make informed decisions about the most effective way to use their valuable resources and develop a suitable marketing mix

• On-going market research helps businesses to update their marketing strategy in line with customers' changing needs and preferences

Market Orientation

• Market orientation is an approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs

  • Consumers are at the centre of marketing decisions

  • **Products **which respond to consumer needs are developed

  • Market-orientated businesses are usually more** adaptable** to to changing customer needs

    • For example, universities often develop new courses based on the feedback they receive from students and the changing requirements of employers

• Market orientation should lead to a business benefitting from increased demand, increased profits, and a valued brand image as its products are more desirable than those of rivals

Tools of market orientation

Market orientation combines market research and market testing with a customer focus

• Market testing is the process of assessing customer reaction to a product or service before it is launched

  • It determines whether there is a potential market for the product or service
  • Features that are likely to be most appealing to consumers
  • For example, a healthcare business may conduct a focus group for a new brand of toothpaste

• Customer focus means putting your customers' needs first

  • Customer-focused businesses focus on enhancing customer satisfaction and building strong customer relationships