identification of customer and consumer characteristics, profiles, wants and needs

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3.2 Market Research – Purposes

Learning objective

Identify and analyse customer and consumer characteristics, develop accurate profiles, and understand their wants and needs so that informed marketing decisions can be made.

Why conduct market research?

  • Obtain reliable, up‑to‑date information about the market environment.
  • Reduce uncertainty when choosing strategic actions.
  • Spot opportunities for new products or services.
  • Evaluate the effectiveness of existing marketing strategies.
  • Understand competitor behaviour and market‑trend dynamics.

3.2.1 Main features of a market

  • Market size – total sales (value) or volume of a product/service in a defined market.
  • Market growth – change in size over time; commonly expressed as compound annual growth rate (CAGR):
    CAGR = (Ending value ÷ Starting value)^(1 ÷ Number of years) – 1
  • Market share – firm’s sales as a proportion of total market sales.
    Market share % = (Firm’s sales ÷ Total market sales) × 100
  • Competitors – number, market positions and relative strengths/weaknesses of rival firms.

3.2.2 Primary vs. secondary research

Aspect Primary research Secondary research
Definition Data collected specifically for the research project (e.g., surveys, interviews, observations). Data already published or collected for another purpose (e.g., industry reports, government statistics).
Typical sources Questionnaires, focus groups, field trials, online tracking, in‑store observation. Trade magazines, market‑research agency reports, census data, company annual reports.
Main features Tailored to the research question; fresh, specific, controllable. Often large‑scale, cheaper, quicker; may be dated or not directly relevant.
Usefulness for decision‑making
  • Testing a new‑product concept or packaging.
  • Measuring attitudes toward a promotional message.
  • Understanding the motivations behind a specific buying behaviour.
  • Estimating market size and growth trends.
  • Benchmarking competitor market shares.
  • Providing background information for a feasibility study.
Advantages High relevance; control over quality and timing. Low cost; readily available; often longitudinal.
Limitations More expensive; time‑consuming; risk of respondent bias. May be outdated; not specific to the firm’s needs; limited by original purpose.

3.2.3 Sampling – need, types and limitations

  • Why sample? Studying an entire population is usually impossible or impractical. A well‑chosen sample provides reliable insights at a lower cost.
  • Probability sampling (representative)
    • Random sampling – every element has an equal chance of selection.
    • Stratified sampling – population divided into sub‑groups (strata) such as age bands; a random sample is taken from each stratum.
    • Systematic sampling – select every nth element from an ordered list.
  • Non‑probability sampling (less representative)
    • Convenience sampling – respondents are chosen because they are easy to reach.
    • Judgement (purposive) sampling – select respondents who are thought to be typical of the target market.
  • Sample‑size estimation – determines how many respondents are needed for a given confidence level and margin of error.
    Example (95 % confidence, ±5 % margin of error):
    n = (Z² × p × (1‑p)) ÷ e², where Z = 1.96, p ≈ 0.5 (worst case), e = 0.05 → n ≈ 385.
  • Limitations of sampling
    • Sampling bias – the sample does not reflect the whole market.
    • Too small a sample reduces statistical reliability.
    • Non‑response – certain groups may be under‑represented.
    • Cost and time constraints may force the use of non‑probability methods.

Reliability and validity of data

Data are only useful if they are reliable (consistent) and valid (measure what they intend to measure).

  • Check source credibility – reputable organisations, recent publications.
  • Assess method consistency – same questions, same conditions for all respondents.
  • Watch for bias – leading questions, social‑desirability bias, researcher influence.
  • Triangulation – use more than one method (e.g., survey + observation) to confirm findings.

Methods for gathering customer information

Method Data type Typical use Advantages Limitations
Surveys (questionnaires) Quantitative Large‑scale profiling; measuring attitudes, frequencies, purchase intent. Fast, cost‑effective, easy statistical analysis. Low response rates; limited depth of insight.
Interviews (face‑to‑face or telephone) Qualitative & quantitative Exploring motivations; testing concepts in depth. Rich, detailed data; flexible probing. Time‑consuming; expensive; possible interviewer bias.
Focus groups Qualitative Understanding group dynamics; generating ideas. Interactive; stimulates discussion. Small, non‑representative sample; dominant participants may skew results.
Observation (in‑store, online tracking) Behavioural Actual purchase behaviour; usage patterns. Unbiased by self‑reporting; captures real actions. Complex interpretation; privacy/ethical concerns.
Secondary data analysis Quantitative & qualitative Market size, trends, competitor analysis. Low cost; readily available; often large datasets. May be outdated; not specific to the firm’s needs.

Analyzing quantitative & qualitative data

  • Quantitative analysis
    • Descriptive statistics – percentages, means, medians.
    • Cross‑tabulation – compare two variables (e.g., age group vs. brand preference).
    • Graphical representation – bar charts, pie charts, line graphs.
  • Qualitative analysis
    • Transcribe interviews/focus‑group recordings.
    • Identify recurring themes (thematic coding).
    • Quote illustrative statements to support conclusions.

Example: Interpreting a bar chart

Bar chart descriptionInterpretation
Four bars show the percentage of 18‑25‑year‑olds who prefer four snack brands: Brand A = 40 %, Brand B = 25 %, Brand C = 20 %, Brand D = 15 %.
  • Brand A is the clear favourite (40 %).
  • Combined, Brands B‑D hold 60 % of the market – a potential opportunity for a new entrant.
  • Check the vertical axis – it starts at 0, so the visual proportion is accurate.
  • Consider the sample size and confidence level before drawing firm conclusions.

Interpreting tables, charts and graphs

Chart type Best used for Key interpretation tips
Bar chart Comparing categories (e.g., brand preference by age group) Check axis scales, ensure bars start at zero, read values directly from bars.
Pie chart Showing parts of a whole (e.g., market‑share distribution) Limit to 5‑6 slices; label percentages; avoid 3‑D effects that distort perception.
Line graph Displaying trends over time (e.g., sales growth) Note intervals, look for upward/downward slopes, identify any outliers.
Table Presenting precise numerical data (e.g., market‑size figures) Check headings, ensure figures are to the same decimal places, highlight key differences.

Linking research findings to business decisions

Research provides the evidence base for:

  • Product development – designing features that meet identified needs.
  • Pricing strategy – setting prices aligned with perceived value and willingness to pay.
  • Promotion – selecting messages, media and tone that resonate with target profiles.
  • Placement (distribution) – choosing channels that match consumer buying habits.

Developing a customer profile – step by step

  1. Define the research objective (e.g., “Identify the primary needs of urban 18‑25‑year‑old consumers for snack foods”).
  2. Select appropriate data‑collection methods (e.g., online surveys + focus groups).
  3. Collect demographic, geographic, psychographic and behavioural data.
  4. Analyse the data to find patterns and segment the market.
  5. Create a detailed profile for each segment, including:
    • Typical age, income, location.
    • Lifestyle, values and attitudes.
    • Buying motivations, barriers and decision‑making processes.
    • Preferred communication channels and media usage.
  6. Use the profiles to tailor the marketing mix (product, price, place, promotion).

Example consumer profile: “Eco‑Conscious Millennials”

Demographic: 25‑35 years, university‑educated, median household income £45 000.

Geographic: Live in major UK cities (London, Manchester, Bristol).

Psychographic: Value sustainability, seek transparency in sourcing, favour brands with a clear environmental mission.

Behavioural: Purchase organic or fair‑trade products weekly; willing to pay a 10‑15 % premium for eco‑friendly packaging.

Wants & needs: Clear environmental credentials, recyclable/compostable packaging, authentic brand storytelling, and convenient online purchase options.

Suggested diagram: Flowchart –> Market Research → Customer Characteristics → Consumer Profiles → Marketing‑Mix Decisions.

Key take‑aways

  • Market research is essential for reducing risk and guiding strategic choices.
  • Understanding who the customers are (characteristics) and what they truly want (needs) enables precise targeting.
  • Primary and secondary data, together with appropriate sampling, give a reliable evidence base.
  • Combining quantitative (statistical) and qualitative (thematic) analysis provides a fuller picture of the market.
  • Well‑constructed consumer profiles translate research insights into actionable marketing actions across the 4 Ps.

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