Pearson Edexcel · GCSE · Business
Course version: 1BS0 · Version from Sept 2017
The purpose of market research: ● to identify and understand customer…
Full specification wording
Market research: The purpose of market research: ● to identify and understand customer needs ● to identify gaps in the market ● to reduce risk ● to inform business decisions.
Market research involves gathering and analysing data about a market and its consumers.
- Point 1 of 3
- 2 key terms
Study notes
From the checked teaching notes for this specification point.
The idea
Market research involves gathering and analysing data about a market and its consumers. Its primary purpose is to identify and understand customer needs, ensuring products match consumer desires. It also helps identify gaps in the market, which are unfulfilled needs that competitors have missed. For example, a clothing brand might use surveys to discover a local lack of sustainable activewear. Furthermore, market research is used to reduce risk by testing ideas before launching them, preventing costly failures. Finally, the collected data is used to inform business decisions, allowing managers to set appropriate prices, choose effective promotions, and plan future products based on solid evidence rather than unreliable guesswork.
What earns the marks
- Define market research as the collection and analysis of data regarding customers, competitors, and the market.
- Explain that research helps a business identify and understand customer needs, leading to better product development.
- Describe how research can identify gaps in the market, allowing a business to target unserved customer segments.
- Explain how gathering data helps to reduce risk by preventing the launch of unwanted products.
- Demonstrate how market research data is used to inform business decisions, such as pricing and promotional strategies.
Common mistakes and how to put them right
Stating that market research eliminates all business risk.
Put it right: State that market research can only 'reduce' or 'minimise' risk, as market conditions can change unexpectedly.
Confusing a 'gap in the market' with a general business idea.
Put it right: Define a gap in the market specifically as an unfulfilled customer need or a segment that is currently not being served by existing competitors.
Providing generic reasons for market research without linking to the specific purposes in the specification.
Put it right: Explicitly use the terms 'reduce risk', 'inform business decisions', 'identify gaps', and 'understand needs' in your answers.
Exam tips
- When evaluating a business decision in an exam, use the lack of market research as a potential reason for failure due to increased risk.
- Always link the identification of a gap in the market to the potential for a business to gain a competitive advantage and increase sales.
- If a case study mentions a business launching a new product, discuss how market research would inform their decisions on price and quality.
Try the lesson
The start of the Market research: The purpose of market research: ● to identify and understand customer needs ● to identify gaps in the market ● to reduce risk ● to inform business decisions. lesson, made from checked teaching notes for this specification point.
Have a go first
What is one of the main purposes of a business carrying out market research before launching a new product?
Listen
Market research involves gathering and analysing data about a market and its consumers. Its primary purpose is to identify and understand customer needs, ensuring products match consumer desires. It also helps identify gaps in the market, which are unfulfilled needs that competitors have missed. For example, a clothing brand might use surveys to discover a local lack of sustainable activewear. Furthermore, market research is used to reduce risk by testing ideas before launching them, preventing costly failures. Finally, the collected data is used to inform business decisions, allowing managers to set appropriate prices, choose effective promotions, and plan future products based on solid evidence rather than unreliable guesswork. A strong answer earns marks for these points. Define market research as the collection and analysis of data regarding customers, competitors, and the market. Explain that research helps a business identify and understand customer needs, leading to better product development. Describe how research can identify gaps in the market, allowing a business to target unserved customer segments. Explain how gathering data helps to reduce risk by preventing the launch of unwanted products. A common slip: Stating that market research eliminates all business risk. Instead, State that market research can only 'reduce' or 'minimise' risk, as market conditions can change unexpectedly. Exam tip: When evaluating a business decision in an exam, use the lack of market research as a potential reason for failure due to increased risk.
See it
Watch it explained
What is the one idea the video explains? Say it in a sentence.
Read the described scene instead
Market research is the collection and analysis of data about customers, competitors and the market. Businesses use it to understand customer needs, spot gaps, reduce risk and inform decisions. The specification gives four linked purposes. First, identify and understand customer needs so products match consumer desires. Second, identify gaps in the market: unfulfilled needs that competitors have missed. Third, reduce risk by testing ideas before launch. Fourth, inform business decisions with evidence rather than guesswork. For example, a clothing brand might use surveys to discover a local lack of sustainable activewear. That is a gap in the market because an unfulfilled customer need is not being served by existing competitors. The research does not eliminate risk, but it can reduce it before the brand invests in a new range. Collected data is used to inform business decisions. Managers can set appropriate prices, choose effective promotions and plan future products based on solid evidence. This matters because market conditions can change unexpectedly, so research supports decisions but cannot guarantee success. Avoid saying market research eliminates all business risk. It can only reduce or minimise risk. Also, do not confuse a gap in the market with a general business idea. A gap is specifically an unfulfilled customer need or a segment not served by existing competitors. Use the specification terms precisely. So, market research gathers and analyses data to identify and understand customer needs, identify gaps, reduce risk and inform business decisions. Use it as evidence, not guesswork, and remember it reduces rather than removes risk. Pause and check: can you name all four purposes?
Key words
Say what each word means before you turn the card.
Market research
Try answering aloud or in your head before turning the card.
Market gaps
Try answering aloud or in your head before turning the card.
See every definition
- Market research
- Gathering and analysing data about a market and its consumers.
- Market gaps
- Unfulfilled needs that competitors have missed.
Label the diagram
Some boxes have lost their names. Pick the right name for each number.
1Box 1
2Box 2
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