Market research | IGCSE Class 10 Business Studies Notes

This note covers the role of market research, primary and secondary research, questionnaires, online surveys, interviews, focus groups, sampling, accuracy, presentation of results and the use of research information in business decisions.

What is market research and why do businesses use it?

Definition: Market research is the collection and analysis of information about a market to help a business make decisions. A market consists of the actual and potential buyers of a product or service.

A market-orientated business places customers' needs at the centre of its decisions. It investigates what customers want and uses that information when deciding what to offer. Research therefore connects understanding customers with the practical decisions involved in satisfying them.

How does research support decisions?

A target market is the group of customers towards whom a business directs its marketing effort. Research helps the business identify this group and understand its needs. It also helps the business examine opportunities and its own strengths and weaknesses before deciding which opportunities to pursue.

Information about customers can influence the features of a product, the price customers are willing to pay and where the product should be available. These are connected decisions: identifying a desired feature is useful when the business also understands the customers who want it.

The refrigerator example illustrates this connection. If customers want double doors or a separate provision for a water cooler, a market-orientated producer considers those features. It also considers a price customers are willing to pay. Customer needs guide the offer.

What does analysing information mean?

Data are the facts or responses collected during an enquiry. Analysis means examining those facts to identify patterns and reach conclusions. Collecting responses is therefore part of research, but the business must also interpret what the responses mean for its decisions.

A manufacturer can use a survey to investigate a product's price, quality or usefulness. A survey gathers information from individuals. It can help reveal how customers view the product, rather than leaving the manufacturer to rely entirely on its own assumptions.

The quality of the decision depends partly on the quality of this evidence. Research can support a choice, but inaccurate answers or an unsuitable selection of people can weaken its basis. A useful conclusion connects the information collected with the specific decision being considered.

How do primary and secondary research differ?

Primary research collects first-hand information for an enquiry. Secondary research uses information already collected and processed by another source. The distinction concerns the origin of the information for the researcher, rather than whether the information appears on paper or on a screen.

What are the advantages of each approach?

Primary research allows a business to direct questions towards the issue it wants to investigate. The researcher can decide what to ask and whom to approach. This can provide information closely connected to the business's particular decision, provided the research is designed appropriately.

Secondary research saves the time and cost of collecting the same information afresh. Published reports, books, newspapers and websites can provide existing information. The researcher can examine this material before deciding whether further first-hand enquiries are needed.

What are the limitations?

Primary research is not automatically accurate. Questions may be misunderstood, responses may be missing and interviewers may influence answers. Time and cost also depend on the method: a face-to-face interview and a mailed questionnaire make different demands on the researcher.

Secondary information may concern a different group, place or period from the one the business needs. Its original purpose may also differ. The business should examine these features before applying the findings to a new decision, rather than assuming that availability means suitability.

The same information can be primary for its original collector and secondary for a later user. Information collected through a new online survey is primary to that enquiry. An existing report downloaded from a website is secondary to the business using it.

Research purpose means the question the enquiry is intended to answer. Keeping that purpose clear makes the comparison meaningful: the choice is about which information can answer the question with suitable accuracy, time and cost.

How should questionnaires be designed and delivered?

A questionnaire is a set of questions used to collect information. A respondent is a person who answers those questions. Respondents may complete a questionnaire themselves, or a researcher may ask the questions and record the answers.

What makes questions useful?

Keep the questionnaire reasonably short and use clear, precise language. Avoid words that allow several interpretations. Arrange questions so that respondents feel comfortable, moving from general questions towards more specific ones. The arrangement should support understanding rather than confuse the respondent.

A leading question suggests how the respondent should answer. Describing tea as high-quality before asking about its flavour introduces a favourable judgement. Removing that description allows the respondent to express an opinion without receiving that particular clue.

Closed-ended questions provide answer options. They are easier to organise and analyse, but the options may exclude a person's true response. An appropriate alternative allowing another response can help. Open-ended questions allow respondents to answer in their own words, but their varied answers are harder to interpret.

How do postal and online questionnaires work?

A postal questionnaire is sent by post for the respondent to complete and return. It is less expensive than personal interviewing, can reach people in remote areas and allows time for thoughtful answers. The interviewer is not present to influence the answers.

However, there is less opportunity to clarify instructions. Mailing is also likely to produce low response rates because questionnaires may be incomplete, unreturned or lost. The response rate is the proportion of people approached who provide a response.

An online survey collects responses through the internet. It can make distribution and collection convenient, but people without suitable internet access may be excluded. A survey completed independently also needs clear wording because a researcher may not be present to explain questions.

A pilot survey is a small preliminary trial of the questionnaire. It helps identify unclear instructions and unsuitable questions before the main enquiry. It can also help assess the time, cost and performance of the people collecting information.

What are the advantages and limitations of interviews and focus groups?

An interview collects information through questions asked directly to a respondent. A personal interview takes place face to face. In a telephone interview, the researcher asks questions over the telephone. Both involve an opportunity for interaction while the questions are being answered.

What are the advantages of interviews?

Personal contact allows the interviewer to explain the study and answer questions about it. The researcher can ask respondents to expand on important answers. Clarification can help avoid misunderstandings, while watching reactions can provide additional information alongside the spoken response.

Telephone interviews are cheaper than personal interviews and can be completed in a shorter time. They also allow the interviewer to clarify a question. Their suitability nevertheless depends on being able to contact the people whose views the enquiry needs.

What are the limitations of interviews?

Personal interviews are expensive because trained interviewers are required, and completing the survey takes longer. The researcher's presence may also inhibit respondents from expressing what they really think. An answer given during an interview is not necessarily a fully honest opinion.

Telephone interviewing has an access limitation where people do not own telephones. It also does not allow the researcher to watch facial reactions. A method should therefore be assessed against both the information needed and the practical ability to reach the intended respondents.

How does a focus group differ?

A focus group is a guided discussion with a small group of people about a product or research topic. A moderator is the person who guides that discussion. The method can explore opinions and reasons in greater depth through interaction between participants.

Discussion can reveal why people hold a view, but stronger voices may influence other participants. A small group's opinions may not represent the wider market. These limitations matter when deciding how far to apply the findings beyond those who took part.

The distinction is between exploring views and establishing how widespread those views are. A focus group can help explain opinions, but its discussion should not be treated as a count of the preferences of every potential customer.

Which secondary research sources can a business use?

Secondary sources provide information already collected. They include published government information, material available online and commercial market research reports. A business chooses among these sources by asking whether the available information is relevant to the research purpose.

What can government sources provide?

Government statistical publications can provide information about population and economic activity. Population information can include size, literacy and the distribution of people between rural and urban areas. Such information describes the wider setting in which a business operates.

The Census of India, a government enumeration of the population, and the National Sample Survey, a programme of surveys on social and economic issues, illustrate sources of published statistics. Their reports become secondary information when another researcher uses the collected results.

How should online and commercial sources be assessed?

The internet provides access to existing reports and other published material. It is a means of obtaining information, rather than a guarantee of quality. The researcher should identify who collected the information and what the figures or statements actually describe.

A commercial market research report is a report supplied by a research organisation for payment. Buying an existing report is secondary research. Its potential usefulness depends on its coverage and relevance, as well as the cost of obtaining it.

Paying for a report does not, by itself, establish that the information answers the business's question. A report about a broad market may not describe the particular customers the business wants to understand. The original collection method also affects how much confidence to place in it.

1. Identify the decision and the information needed to support it.
2. Check the source, collection method and meaning of the reported information.
3. Check the period, place and group covered by the data.
4. Decide whether the information is suitable or further research is needed.

This checking sequence prevents the business from treating every available figure as equally useful. Information may be accurate for its original purpose yet unsuitable for the present enquiry. Relevance concerns the connection between the evidence and the decision to which it is applied.

Why is sampling needed in market research?

The population is the complete group to which the enquiry relates. A sample is the smaller group from which information is collected. Sampling means selecting that group. A census collects information from every member of the population.

Why use a sample rather than a census?

Collecting information from everyone can require substantial time and expenditure. A good sample can provide reasonably reliable and accurate information at lower cost and in a shorter time. Most surveys are sample surveys. Their usefulness depends on how effectively the sample represents the relevant population.

A representative sample reflects the relevant characteristics of the population. It is generally smaller than the population and can provide reasonably accurate information about it. Representativeness concerns the people selected, rather than simply whether the researcher has collected many responses.

Smaller surveys can permit more detailed enquiries. A smaller team of people collecting information is also easier to train and supervise effectively. These benefits help explain why sampling is useful even when the researcher wants to understand a much wider group.

How can a sample be selected?

In random sampling, every member of the population has an equal chance of selection. In non-random sampling, selection may depend on the researcher's judgement or convenience, so members do not all have an equal chance.

Consider the enquiry into the effect of a petrol price rise on household budgets in a locality. The population contains 300 households. The names are written on paper, mixed and 30 selected one by one. This lottery method gives each household an equal chance of selection.

The population is all 300 households; the sample is the 30 selected. The purpose is to learn about the wider group from the smaller group. Selecting familiar households simply because they are convenient would be a different, non-random method.

Note: A sample can provide reasonably accurate information. That does not mean its findings must match the whole population exactly. The selection method, missing responses and accuracy of recording remain important.

First identify the population relevant to the question. Only then consider how to select respondents. Otherwise, a carefully administered survey may still collect information from people whose views do not answer the intended question.

What affects the accuracy of market research data?

Accuracy concerns how closely research information reflects what it is intended to measure. It depends on more than the number of answers collected. Selection, wording, response and recording can all affect the usefulness of the final evidence.

How do sample selection and size matter?

Sampling error is the difference between a sample estimate and the corresponding actual population value. An estimate is an approximate value inferred from the available information. It is possible to reduce the magnitude of sampling error by taking a larger sample.

Sampling bias occurs when the selection plan prevents some members of the intended population from being included. A larger sample does not necessarily remove that problem. The researcher needs to examine who can enter the sample, as well as how many people it contains.

Non-response occurs when a selected person cannot be contacted or refuses to answer. The resulting observations may not represent the intended population. Counting invitations sent is therefore different from checking the answers actually received and the groups those answers cover.

What other errors can occur?

Non-sampling errors are errors associated with matters such as biased selection, missing responses or incorrect recording. Even a census can contain these errors. It is difficult to minimise them merely by taking a large sample.

Unclear questions can produce misunderstood answers. Leading wording may influence the respondent, and an interviewer's presence may discourage a frank response. A pilot survey can identify some difficulties with questions and instructions before the full enquiry begins.

Recording errors occur when information is written down or transferred incorrectly. Recording 13 instead of 31 is an example. Checking the collected responses and the way they are entered helps prevent a mistake in recording from becoming a misleading result.

How should a business choose an appropriate research method?

The appropriate method depends on the objective, meaning the purpose the research is intended to achieve. There is no single choice that removes every limitation. The business must connect the kind of information required with the practical strengths and weaknesses of the method.

How do the information needs affect the choice?

When existing information answers the question adequately, secondary research can save collection time and cost. When the available information does not address the particular issue, primary research can be designed around it. The business may use existing information to identify questions for further investigation.

Where detailed explanations are important, an interview can allow follow-up questions. A focus group can explore views through discussion. Closed-ended questionnaires make responses easier to organise, while open-ended answers provide more individual detail but are harder to interpret.

These are trade-offs, meaning that gaining one benefit can involve accepting another limitation. Choosing a method therefore requires more than naming its advantage. The business should explain why that advantage matters for the information it needs.

How do practical constraints affect the choice?

Cost is the expenditure involved in obtaining information. Time includes preparing, collecting and processing it. Face-to-face interviews require trained interviewers and take longer; mailed questionnaires are less expensive but can produce missing answers and misunderstandings.

Access also matters. A telephone enquiry depends on reaching respondents by telephone; an online enquiry depends on suitable internet access. A method that is convenient for the researcher can still leave out people whose opinions the business needs.

1. State the question the business needs the research to answer.
2. Assess whether relevant existing information is available.
3. Compare suitable primary methods if further information is required.
4. Consider time, cost, access and possible effects on accuracy.
5. Select the method and explain both its main benefit and its limitation.

This is a reasoning framework for a research decision. It connects the choice to the business's information needs. A recommendation is stronger when it explains why the selected method fits those needs and recognises the conditions that could reduce its usefulness.

How can research results be presented clearly?

Presentation organises information so that readers can understand and use it. Results can be described in words, arranged in tables or shown in diagrams and graphs. The appropriate form depends on the amount of information and the comparison the reader needs to make.

When are words and tables useful?

Textual presentation describes information in sentences. It is more suitable when the quantity of data is not large. It can emphasise particular points, but readers must work through the description to understand the complete set of information.

A table arranges information in rows and columns. Clear titles and headings tell the reader what the figures represent. Units, such as people or percentages, must be identified. A percentage expresses a value as a share of one hundred.

How do graphs and diagrams compare?

In a bar diagram, the height or length represents the value. In a component bar diagram, subdivisions show the parts of the total. A pie chart also represents composition, but uses parts of a circle rather than sections of a bar.

A time series is information recorded across successive times. A line graph places time along the horizontal axis and values along the vertical axis. An axis is a reference line on a graph; its labels and scale explain how positions correspond to values.

Read titles, labels and units before comparing shapes. A taller bar shows a higher value for the measure displayed, but the reader must establish what that measure is. Clear presentation helps understanding; it does not correct weaknesses in the underlying research.

How can simple conclusions be drawn from research results?

Interpretation means explaining what the presented information indicates. Begin with what is actually measured, compare relevant values and then state the conclusion. Keep the conclusion within the group, place and period covered by the information.

How can a component diagram be read?

The following data concern school enrolment, rather than customer preferences. They demonstrate the reading skill used with percentage charts. The figures describe children aged 6 to 14 years in a district of Bihar. Each row separates enrolled children from those out of school.

Three vertical component bars are labelled Boys, Girls and All. Each has an Enrolled lower section and an Out of school upper section. The sections carry the percentages shown in the table.

See Fig. 4.3 in your NCERT textbook

The enrolled share is higher for boys than for girls in these data. The out-of-school share is higher for girls. For all children covered, 78.0 per cent are enrolled and 22.0 per cent are out of school. These statements describe the displayed proportions.

What should a conclusion avoid?

The chart does not provide the number of children in each group, so the percentages alone do not establish the absolute numbers. It also does not explain the reasons for the difference. A comparison of outcomes and an explanation of their causes require different evidence.

Apply the same discipline to market research. Identify the category with the larger recorded value, explain what that comparison measures and connect it to the business's question. A pattern in the responses can inform a decision without proving that everyone in the wider market holds the same view.

Before making a recommendation, consider whether the information is relevant and how it was collected. Sample selection, missing responses and question wording remain important after results have been converted into a chart. Presentation makes evidence easier to read; interpretation must still respect its limits.

Glossary

• Market research — Collection and analysis of information about a market to support business decisions.
• Market-orientated business — A business that places customers' needs at the centre of its decisions.
• Primary research — Research that collects first-hand information for the particular enquiry being undertaken.
• Secondary research — Research using information already collected and processed by another source.
• Questionnaire — A set of questions used to collect information from people taking part in an enquiry.
• Respondent — A person who provides answers to questions in a survey or interview.
• Focus group — A small group taking part in a guided discussion about a product or research topic.
• Population — The complete group of individuals or items to which the research relates.
• Sample — A smaller group selected from the population from which information is obtained.
• Random sampling — A selection method giving every population member an equal chance of being chosen.
• Sampling bias — A selection problem that prevents some members of the intended population from being included.
• Pilot survey — A small preliminary trial used to check a questionnaire and its practical administration.
• Sampling error — The difference between a sample estimate and the corresponding actual population value.
• Non-response — Failure to obtain an answer because a selected person is unreachable or refuses to respond.

Common errors and misconceptions

• Misconception: All information found online is secondary. Correct: An existing online report is secondary, but collecting new responses through an online survey is primary research.
• Misconception: Primary research must be accurate. Correct: First-hand collection can still involve unsuitable samples, misunderstood questions, missing answers and recording errors that weaken the findings.
• Misconception: A sample and a population mean the same thing. Correct: The population is the whole relevant group; the sample is the smaller group selected for investigation.
• Misconception: A larger sample removes every error. Correct: Increasing sample size can reduce sampling error, but does not necessarily remove biased selection or other non-sampling errors.
• Misconception: A focus group's opinions represent every customer. Correct: The discussion explores participants' views; its small group may not represent the wider market's preferences.
• Misconception: A higher percentage proves a larger number of people. Correct: Absolute numbers also depend on the sizes of the groups whose percentages are compared.
• Misconception: An attractive chart establishes that the research is reliable. Correct: A chart presents the available data; the collection method and accuracy still need examination.

Exam-style questions with model answers

Q1. Define primary research and secondary research. [2 marks]

1. Primary research collects first-hand information for the particular enquiry being carried out.
2. Secondary research uses information already collected and processed by another source, rather than collecting it afresh.

Q2. Explain four features of a well-designed questionnaire. [4 marks]

1. Use clear and precise wording so respondents understand what information each question asks them to provide.
2. Avoid leading questions because words suggesting a preferred answer can influence the response and weaken the evidence.
3. Keep the questionnaire reasonably short so it does not place an unnecessary burden on the person answering.
4. Arrange questions from general to specific so the sequence supports understanding and helps respondents feel comfortable.

Q3. Explain two advantages and two limitations of personal interviews as a research method. [4 marks]

1. The interviewer can explain a question when the respondent is uncertain, helping to avoid misunderstandings in the answer.
2. The interviewer can ask for more detail about important responses, producing a fuller explanation of the person's views.
3. Personal interviewing is expensive because trained interviewers are required to carry out the enquiry and collect information.
4. The interviewer's presence may inhibit respondents, so they may not express what they really think about the topic.

Q4. An enquiry into the effect of a petrol price rise covers a locality containing 300 households. All their names are written on paper and mixed; 30 names are drawn one by one for interviews. Identify the population, sample and sampling method. [3 marks]

1. The population is all 300 households in the locality because this is the complete group the enquiry seeks to understand.
2. The sample consists of the 30 households selected for interviews, from which the researcher will collect the required information.
3. The method is random sampling using a lottery: mixing all names and drawing them gives each household an equal chance of selection.

Q5. Explain three benefits of sampling and three reasons why sample research may still be inaccurate. [6 marks]

1. A sample can reduce the cost of an enquiry because information is collected from a smaller group rather than the whole population.
2. It can reduce collection time, allowing the researcher to obtain reasonably reliable information without having to contact every population member.
3. A smaller survey can permit more detailed enquiries, while a smaller team of investigators is easier to train and supervise effectively.
4. Sampling bias can exclude some population members from selection, so the collected information may not reflect the entire intended group.
5. Non-response can occur when selected people cannot be contacted or refuse to answer, leaving observations that may be unrepresentative.
6. Incorrect recording can change a response during entry or transfer, so the final data do not match the information actually provided.

Q6. A component chart shows school enrolment among children aged 6 to 14 years in a district of Bihar. Boys: 91.5% enrolled, 8.5% out of school. Girls: 58.6% enrolled, 41.4% out of school. All children: 78.0% enrolled, 22.0% out of school. The symbol % means per cent. Give four conclusions about the percentages, then explain two limits on what these figures establish. [6 marks]

1. The enrolled percentage is higher for boys, at 91.5 per cent, than for girls, at 58.6 per cent, in the group described.
2. The out-of-school percentage is higher for girls, at 41.4 per cent, than for boys, whose corresponding figure is 8.5 per cent.
3. Among all the children covered by the figures, 78.0 per cent are enrolled, which is more than half of that group.
4. The remaining 22.0 per cent of all children covered are out of school, so enrolment does not include the whole group.
5. The figures do not give the total number of boys or girls, so they do not establish the absolute numbers in either category.
6. The figures show a difference in enrolment but provide no evidence explaining its cause, so a causal explanation would require additional information.

Q7. Explain three checks a business should make before using an existing commercial market research report. [3 marks]

1. Check whether its subject and the people covered match the business's research purpose, since information about another group may be unsuitable.
2. Check when and where the information was collected, because the business needs evidence relevant to the period and place of its decision.
3. Check the original source and collection method, including possible weaknesses, before deciding how much confidence to place in the report's findings.

Key takeaways

• Market research gathers and analyses information that helps businesses understand customers and make decisions about their offers.
• Primary research collects first-hand information; secondary research uses information already collected and processed by another source.
• Questionnaires need clear wording and a suitable sequence; a pilot survey helps identify problems before the main enquiry.
• Interviews allow clarification and fuller responses, but their cost and possible influence on answers must be considered.
• A representative sample can provide reasonably accurate information at lower cost and in less time than a census.
• Accuracy depends on selection, questions, responses and recording; increasing sample size does not remove every kind of error.
• Tables, charts and graphs help organise research results, but their labels and units must be understood before interpretation.
• Conclusions should describe what the evidence supports and recognise the limits of its population coverage and collection method.

Test yourself

What makes a business market-orientated?

It places customer needs at the centre of decisions and uses information about those needs when deciding what to offer.

Why is an existing online report secondary information?

The information has already been collected by another source and is being used again by the researcher.

What distinguishes an open-ended question from a closed-ended question?

An open-ended question allows an answer in the respondent's own words; a closed-ended question provides answer options.

What is the purpose of a pilot survey?

It trials a questionnaire with a small group to identify problems with questions, instructions and practical administration.

Why might a focus group fail to represent a whole market?

Its participants form a small group whose views may differ from those of the wider market.

What distinguishes random sampling?

Every member of the relevant population has an equal chance of being selected for the sample.

Can a census contain errors?

Yes. Covering the whole population does not remove non-sampling errors such as incorrect recording or missing responses.

What should you read before interpreting a chart?

Read the title, category labels, units and scale to establish what the values and comparisons actually represent.