Market Research
What Is Market Research?
Market research is how a business finds out what customers want, what rivals are doing and how big the market really is. Without it, decisions are guesswork. With it, a business can launch products, set prices and design adverts based on evidence from real people and real data. The specification requires you to know how different methods and sources of research suit different business questions — and how to use both qualitative and quantitative data.
Tesco is a useful example. Its Clubcard scheme collects data from millions of shoppers every week, telling Tesco which products are selling, which adverts worked and where to open the next store. A small independent bakery cannot match that scale, but it can still do good research — a ten-minute walk around the high street to count rivals is research; a short chat at the counter about what customers would try next is research. Research does not have to be expensive; it has to answer the business question.
Market research splits two ways: by WHO collects it (primary = the business itself; secondary = someone else already) and by WHAT kind of data it collects (qualitative = opinions and reasons; quantitative = numbers and measurable facts).
Primary Research Methods
Primary research is brand-new information the business collects for itself. It is gathered for a specific purpose, so it is relevant and up to date — but it takes time and money. The OCR specification names four primary methods: questionnaires, interviews, trialling and focus groups.
Questionnaires — a set of written questions sent online, emailed, posted or handed out. They can reach large samples quickly and the answers are easy to count, but written questions cannot probe feelings deeply.
Interviews — a one-to-one conversation between a researcher and a customer. They produce rich, detailed answers, but are slow and expensive, and the interviewer can unintentionally lead the answers.
Trialling — letting a small group use the actual product before launch. Deliveroo did this in Chelsea for six months in 2013 before rolling the app out nationwide. Trialling is powerful because customers react to the real thing, not a description — but it is expensive because the business has to make the product first.
Focus groups — a small group of 6–10 target customers discusses a product while a researcher listens. Honest reactions are captured, but one loud voice can dominate and bias the result.
Secondary Research Sources
Secondary research uses information that already exists — someone else collected it first. It is fast and cheap, but it may be out of date or not quite fit the question. The OCR spec names four secondary sources: newspapers and magazines, the census, websites, and internal data.
Newspapers and magazines carry articles on market trends, rival launches and industry reports — useful for spotting the competitive landscape. The census, carried out every ten years by the Office for National Statistics, shows the age, income and location of the UK population in detail — ideal for picking a target segment. Websites include competitor sites, review platforms like Trustpilot, government data and market reports from firms like Mintel; most are free or cheap.
Internal data is the goldmine most small businesses forget about — information the business already has from its own systems. EPOS till data shows which products sell best and at what times. Customer databases record repeat buying, email open rates and average order values. Loyalty card schemes join all this together. Internal data is free, specific to the business and always up to date.
Qualitative vs Quantitative Data
Qualitative data gathers opinions, feelings and reasons — why customers buy, how they feel about a brand. Interviews and focus groups produce qualitative data. It is rich and detailed but hard to turn into a graph.
Quantitative data records numbers — how many people, how much they spend, how often they buy. Large-scale questionnaires, till data and census figures produce quantitative data. It is easy to plot on charts and compare across segments, but it does not explain why.
Good businesses use both. Tesco’s Clubcard shows what customers buy (quantitative); a focus group then explains why they switched from Tesco to Aldi (qualitative). Together, the two answer the full question. Netflix does the same thing — its servers log which shows are watched and for how long (quantitative), while surveys explore why people cancel their subscription (qualitative). A decision worth hundreds of millions of pounds needs more than one angle.
Matching the Method to the Question
Which method a business picks depends on the question, the budget and the time available. A brand-new start-up with £500 cannot afford focus groups run by a research agency; it can afford a free online survey shared on Instagram. A big supermarket trialling a new ready meal can trial it in ten stores first, cheaply gathering real sales data before a national rollout. Picking the wrong method wastes money — running a focus group to find out how many people shop at a supermarket is using an expensive qualitative tool to answer a quantitative question.
Research is never perfect. Sample size matters — a survey of 30 people is too small to trust. Sampling bias distorts the result — asking shoppers outside Waitrose will not tell you what Aldi shoppers think. Leading questions (‘don’t you agree our product is great?’) push customers to answer the way the business hoped. And customers sometimes say what sounds good rather than what they will actually do, especially on price or ethics. A business that does not check these issues can make a very costly decision based on flawed data.
Market Size and Market Share
Market research also produces the data behind two key numbers. Market size is the total value or volume of sales in a market — the UK coffee shop market, for instance, is worth around £5 billion per year. Market share is the slice of that market one business controls. The formula is: market share (%) = (business sales ÷ total market sales) × 100. If Costa’s UK coffee sales are £1.1 billion and the total coffee shop market is £5 billion, Costa’s market share is (1.1 ÷ 5) × 100 = 22%. Tracking market share over time is more useful than tracking sales alone — if Costa’s sales rise 3% but the whole market grows 10%, Costa is actually losing ground to Pret and Caffè Nero.
Market share (%) = (business sales ÷ total market sales) × 100. A change in market share is more revealing than a change in sales on its own, because it shows how the business is doing compared with rivals.