Use of market research: information that may help decision making

The idea

Market research gathers information about customers, competitors and markets so a business can decide with evidence rather than guesswork. Primary research is collected first-hand for the firm's own purpose, for example a questionnaire or interview; secondary research uses data that already exists, such as government statistics or competitor websites. The information may help decision making in several ways: it can reveal what customers want, how much they will pay, where and when they buy, and what rivals offer. It also reduces the risk of costly mistakes, such as launching a product nobody wants, and can support choices about pricing, promotion, location and product design. Findings are only useful if they are relevant, accurate and timely, because poor-quality information can mislead managers.

What earns the marks

• Identifies market research as the collection and analysis of information about customers, competitors and the market, used to support business decisions.
• Distinguishes primary research, collected first-hand for the business's own purpose, from secondary research, which uses existing data such as government statistics or competitor websites.
• Explains how findings can inform specific decisions, for example setting a price customers will pay, choosing a promotion, selecting a location or designing a product.
• Explains that market research can reduce the risk of costly mistakes, such as launching a product with no demand, by replacing guesswork with evidence.
• Recognises that information must be relevant, accurate and timely, since poor-quality or outdated data can lead managers to make poor decisions.
• Applies the use of market research to a given business context, linking the information gathered to a decision that business would actually face.

Common mistakes and how to put them right

• Treating all market research as primary research.

  Put it right by checking whether the data was collected first-hand by the business or already exists elsewhere.

• Assuming more research always improves decisions.

  Put it right by noting that irrelevant, inaccurate or outdated information can mislead managers.

• Describing market research only as asking customers questions.

  Put it right by including secondary sources such as government statistics and competitor information.

Exam tips

• Name the type of research and the decision it supports, rather than describing research in general terms.
• Use the business in the case study: state what it wants to find out and how that finding would change what it does.
• When evaluating, weigh the benefit of better decisions against the cost and time of collecting the information.