Market Research Methods
Before risking money on a new idea, a business finds out what customers actually want. Learn the methods of market research, primary and secondary, and how to pick the right one for the budget and the question.
Put it to work, not just to memory
Free and interactive, so you are arguing with the material rather than rereading it.
Start revising freeWhat you'll cover
Ask before you spend
Starting or growing a business is risky. Before spending money on a product, a smart owner finds out whether customers actually want it, what they will pay, and who the competition is. That is what market research does. Good research helps a business identify customer needs, spot gaps in the market, reduce risk and make better decisions. This module covers the methods and how to choose the right one.
Research words
Market research splits two ways: where the data comes from, and what kind of data it is.
Why do market research?
Which of these is a main purpose of market research for a business?
- To identify customer needs and reduce the risk of a decision
- To calculate how much corporation tax the business owes
- To decide how many staff to make redundant
- To work out the rent on the business premises
Match each method to what it is
- Focus group
- Questionnaire
- Observation
- Government report
- A small guided discussion giving in-depth opinions
- A set list of questions answered by many people
- Watching how customers actually behave in a shop
- Existing national data already published by the state
Primary vs secondary
The first big split is where the data comes from. Each type has a trade-off between cost, time and how well it fits the exact question.
Which are primary research?
Select the TWO methods that are primary research.
- Running a customer survey
- Holding a focus group
- Reading market data on the internet
- Looking up a government report
Numbers or opinions?
The second split is the kind of data: - Quantitative data is numbers you can count: how many, how much, what percentage. Great for spotting trends. - Qualitative data is opinions in words: why customers like or dislike something. Great for understanding reasons. Whichever you use, check the data is reliable - a big, recent, unbiased sample can be trusted; a tiny or out-of-date one can mislead. Social media is now a cheap, fast way to gather both kinds from many customers.
Match each idea to its meaning
- Quantitative data
- Qualitative data
- Market segmentation
- Market mapping
- Numerical data you can count and measure
- Opinions and reasons expressed in words
- Dividing customers into groups with shared characteristics
- Plotting competitors on a chart to find a gap in the market
What kind of data?
A cafe holds a focus group and records customers explaining why they prefer oat milk. What type of data is this?
- Qualitative data, because it captures opinions and reasons in words
- Quantitative data, because a cafe collected it
- Secondary data, because it came from customers
- Sales data, because it is about a drink
Order the research process
Put the steps a business follows when doing market research into a sensible order.
- Decide what you need to find out (the question)
- Choose a suitable research method for the budget and timescale
- Collect the data from customers or sources
- Analyse the results and check they are reliable
- Use the findings to make a business decision
Research in one paragraph
Data a business collects first-hand, such as a survey, is called _____ research, while data reused from existing sources is _____ research. Numerical data you can count is _____, whereas opinions in words are _____. Before trusting any findings, a business should check the data is _____.
Choose the right method
Three businesses need research. Pick the most suitable method for each situation.
- A new market-stall owner has almost no budget and needs a quick sense of local demand. What should they do?
- A growing bakery wants to understand WHY loyal customers keep coming back, in depth. Which method fits best?
- A business needs reliable numbers on the size of the whole UK coffee market, fast and cheaply. What is best?
Your turn: justify a method
A student is opening a small smoothie kiosk near a college. They have a tiny budget and only two weeks before opening. Recommend ONE market-research method they should use, and justify your choice against their budget, timescale and what they need to find out.
- Name one specific method (e.g. a short questionnaire, observation of footfall, a social-media poll)
- Explain how it fits their tiny budget
- Explain how it fits their two-week timescale
- Link it to what they need to know (local demand, price customers will pay)
Pick a method and defend it
Weaker answers just list research methods. The best answers justify a choice: they pick a method and explain why it suits *this* business, given its budget, its timescale, and exactly what it needs to find out. So a cash-strapped start-up leans on cheap, fast options - observation, a short questionnaire, a social-media poll, or secondary reports - while a business wanting deep reasons chooses a focus group. Always weigh the reliability of the data too, and, in segmentation questions, use market mapping to point to a real gap rather than just describing the customer groups.