Market research — Edexcel A-Level Business
Test yourself on Market research with PEARSON EDEXCEL A-Level practice questions.
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Market research explained
One approach starts with what the business can make brilliantly and trusts the invention to find buyers; the other starts with research into what people will pay for and builds backwards, and most real firms sit somewhere between the two.
Read the full explanation
Being led by the customer lowers the chance of a failed launch, supports segmentation and makes demand easier to forecast, but it costs money, tends to produce small improvements rather than leaps, and asks customers to describe something they have never seen. Being led by the product can deliver breakthroughs and high margins, as Dyson and much of pharmaceuticals show, yet it risks a technically superb item nobody wants. The evaluation normally turns on how fast the market is moving and on whether the firm can afford either the research or the failure.
b) Primary and secondary market research data (quantitative and qualitative) used to: identify and anticipate customer needs and wants; quantify likely demand; gain insight into consumer behaviour
Evidence gathered first hand for the decision in front of you is current and confidential but slow and expensive, while evidence that already exists, whether internal sales records or a published industry report, is cheap and immediate yet was collected for somebody else's purpose and may be out of date. Numerical work answers how many and at what price, and it is what feeds a sales forecast, an extrapolation or a break even calculation. Discussion based work from focus groups and depth interviews answers why people choose, which is what shapes advertising and product design. A small firm leans on desk sources and free analytics because a national survey is unaffordable. The evaluation point is that evidence narrows uncertainty rather than removing it, so its cost has to be set against the cost of a launch that fails.
c) Limitations of market research, sample size and bias
Findings are evidence, not proof, and the marks come from saying how far a particular set of them can be trusted. A bigger sample narrows the margin of error but costs more and reaches diminishing returns quickly, so the practical test is whether the people asked represent the target group rather than simply how many there were. Distortion creeps in through who was approached, how the question was worded, who chose to reply and the habit of giving the answer the interviewer seems to want, which is why stated intention to buy reliably overstates actual purchase. Evidence also ages fast in a moving market. A sensible conclusion accepts the direction of the finding, treats the precise figure with caution, and recommends a test launch in one region before the firm commits fully.
d) Use of ICT to support market research: websites; social networking; databases
Digital tools have made evidence cheaper, faster and based on what customers actually do rather than what they claim they would do. Site analytics record traffic, click through rates, abandoned baskets and the page people leave from, so a retailer can run two versions of a page and keep the one that sells. Social platforms give real time reaction, free reach into a specialist group and a channel for involving customers in design, though they over represent younger and more vocal users and can be distorted by fake reviews. Customer records and loyalty schemes, of which the Tesco Clubcard is the classic case, link purchases to identified shoppers and drive targeted offers. The limits are legal and practical: consent and data protection rules restrict use, and volumes of data are worthless without the analytical skill to read them.
e) Market segmentation
Splitting buyers into groups with similar needs lets a firm aim one product, one price and one message at the people most likely to respond, which lifts conversion and supports a premium instead of spreading a single campaign thinly across everybody. The usual bases are age and income, location, lifestyle and attitude, and buying behaviour, and a group is only worth serving if it can be measured, reached, told apart from the others and is large enough to be profitable. The gain in relevance is paid for in cost: shorter production runs sacrifice economies of scale, several campaigns cost more than one, and going too far leaves a range whose products eat each other's sales. A perceptual map is the usual tool for spotting a gap, and it is blind to whether the gap is empty because nobody wants what would fill it.
Your focus
- a) Product and market orientation
- b) Primary and secondary market research data (quantitative and qualitative) used to: identify and anticipate customer needs and wants; quantify likely demand; gain insight into consumer behaviour
- c) Limitations of market research, sample size and bias
Show all 5 objectives
- d) Use of ICT to support market research: websites; social networking; databases
- e) Market segmentation
Market research exam tips
Marking Points
- Characterises the named firm's approach with evidence, for example heavy spending on research and development rather than on consumer panels
- Explains a benefit as a business outcome such as a lower failure rate, a higher margin or a faster route to launch
- Identifies the cost or weakness of the approach the firm has actually chosen, not of the alternative
- Concludes that the right balance depends on the market, the budget and the stage the product has reached in its life cycle
- Matches the method to the purpose, for example a focus group to understand motivation and a large survey to size likely demand
- Justifies the choice using the firm's budget, its time frame and the decision actually being taken
- Uses a figure from the research in the extract and draws a conclusion from it rather than describing the table back to the examiner
- Weighs the cost and delay of collecting fresh evidence against the poorer fit of material collected for another purpose
- Names the specific weakness in the research described, such as a self selecting online panel, a leading question or a narrow geographic spread
- Explains the consequence for the decision, for example an overstated forecast leading to excess stock and a cash flow problem
- Comments on the number surveyed in relation to the size and variety of the target group, not as a bare figure
- Still uses the finding, suitably qualified, rather than dismissing the research and losing the application marks
- Names the technology and the specific evidence it yields, such as basket abandonment rates or repeat purchase intervals from loyalty records
- Shows how that evidence changes a decision on pricing, product range or promotion for the named business
- Recognises the low cost and speed relative to a commissioned survey and links this to a small firm's budget
- Qualifies the finding with coverage problems or with consent and data protection constraints
- Identifies the base the firm is actually using, for example income or lifestyle, from evidence in the extract rather than from a list
- Links the chosen group to a specific element of the marketing mix rather than to marketing in general
- Explains the revenue gain, such as a higher achievable price or better conversion, alongside the cost of serving each group separately
- Tests the group against whether it is big enough, reachable and profitable at an acceptable cost to serve
Examiner Tips
- 💡Expect an explain or analyse question attached to a case firm with a dominant founder or an unusually large research budget
- 💡Strong evaluation states the condition under which each approach wins and then tests that condition against the extract
- 💡Questions usually supply a small research extract, so quote the number, state what it implies for demand, then qualify it with the sample
- 💡An analyse question wants a chain: method chosen, information gained, decision improved, consequence for profit or cash
- 💡This is the standard evaluation paragraph for any question built on a research extract, so keep a version ready to adapt
- 💡Assess questions reward a conditional judgement: the finding is usable as a guide to direction but not as a precise volume
- 💡These questions are often set on a small or newly started business, so frame the benefits around a limited budget and the need for speed
- 💡Evaluation lives in the coverage gap and in privacy rules, so develop one of each rather than listing more tools
- 💡Perceptual maps appear in data response questions, so read both axes carefully before describing any gap in the market
- 💡For recommend questions, name one group, justify the choice with case evidence and state what the firm would have to change to serve it
Common Mistakes
- Dismissing the product led approach as old fashioned, when it is standard in pharmaceuticals and in much of technology
- Equating being customer led with simply having done some market research, rather than with the whole business being organised around customer need
- Asserting that listening to customers guarantees success, which ignores research costs and the gap between stated preference and actual purchase
- Assuming first hand evidence is always numerical and existing evidence is always descriptive, when either source can be either type
- Listing methods as a shopping list without saying what decision each one would improve
- Treating a published market report as fact, ignoring that it may predate the change described in the case
- Saying only that the sample is too small, with no view on who was chosen or how they were selected
- Rejecting the research outright, which throws away the evidence the rest of the answer needs
- Assuming a large sample cures distortion, when an unrepresentative group simply repeats the same error more often
- Writing that social platforms are free, ignoring the staff time, content production and paid promotion behind them
- Treating online behaviour as representative of the whole market when people who do not use the channel are invisible to it
- Describing what a customer database holds without saying what the business would do differently as a result
- Confusing the act of dividing the market with the decisions that follow it, namely which group to aim at and how to position against rivals
- Listing every possible base instead of choosing the one that fits the business described in the case
- Recommending more groups without costing the lost economies of scale or the extra promotional spending