The purpose of market research relating to: demand, competition, target market.

Business and Commercial Practices – Market Research

Learning Objective

Explain the purpose of market research and show how the findings shape design and commercial decisions, specifically:

• Demand
• Competition
• Target market
• Product‑life‑cycle (PLC) and extension strategies
• Marketing mix (4 Ps)
• Scale of production ↔ unit‑cost relationship

Purpose of Market Research

Market research provides the evidence base that reduces risk, informs the design brief and determines the appropriate PLC stage for a product. It links:

• Customer needs → design specifications (function, materials, ergonomics)
• Market size & growth → realistic sales forecasts and pricing strategy
• Competitive landscape → positioning, differentiation and extension routes
• Target‑market profile → choice of promotional tactics and distribution channels

Why Conduct Market Research?

Research enables you to:

1. Identify genuine customer needs and preferences.
2. Quantify the size of the market and forecast its growth.
3. Analyse competitors’ strengths, weaknesses and market share.
4. Define and segment the most profitable target market.
5. Choose an appropriate PLC stage and plan suitable extension strategies.
6. Determine the optimal scale of production, manufacturing method and pricing to achieve target profit margins.

Researching Demand

Demand research answers “how many customers want the product, at what price, and under which conditions”.

Researching Competition

A competitive analysis uncovers rivals’ strategies, strengths, weaknesses and positioning.

• Identify direct and indirect competitors.
• Analyse product features, pricing, distribution (place) and promotion.
• Calculate market share where data are available.
• Summarise findings with a SWOT framework (Strengths, Weaknesses, Opportunities, Threats).

Researching the Target Market

Segmentation creates a clear picture of the customers most likely to buy the product.

Product Life‑Cycle (PLC) & Extension Strategies

The PLC describes the typical sales‑revenue pattern of a product and informs design choices at each stage.

1. Introduction – low sales, high development & launch costs. Design implication: premium materials, distinctive branding, prototype‑level manufacturing.
2. Growth – rapid sales increase, economies of scale appear. Design implication: cost‑effective materials, modular design for rapid up‑scaling.
3. Maturity – sales plateau, market saturation, price competition. Design implication: incremental improvements, value‑added features, optimisation for mass‑production.
4. Decline – falling sales, product may be withdrawn or revitalised. Design implication: redesign for new markets, recycling‑friendly materials, or transition to a service model.

Extension strategies used to prolong the PLC:

• Product‑line extension – new colours, sizes, or features (e.g., a “lite” smartphone).
• Re‑packaging – different packaging, bundle offers or eco‑friendly containers.
• Discounting / promotional pricing – penetration or clearance pricing.
• Market‑segment extension – targeting a new demographic or geographic segment.
• Service extension – warranty upgrades, maintenance contracts, or subscription services.

Example 1 (Technology): A flagship smartphone moves from introduction to growth; the manufacturer launches a “lite” version (product‑line extension) and a “student” bundle (market‑segment extension) to prolong growth.

Example 2 (Sustainable product): A reusable water bottle reaches maturity; the company introduces a biodegradable sleeve (re‑packaging) and a refill‑station partnership (market‑segment extension) to extend the product’s life while meeting eco‑friendly demand.

Marketing Mix – The 4 Ps

Scale of Production ↔ Unit‑Cost Relationship

• Increasing output generally lowers the average cost per unit (economies of scale) because fixed costs are spread over more units.
• Very small batches raise unit cost due to set‑up, tooling and labour inefficiencies.

Illustration: Total cost = £10 000 (fixed) + £5 × Q (variable)

• Q = 500 units → unit cost = (£10 000 + £2 500) ÷ 500 = £25 per unit.
• Q = 2 000 units → unit cost = (£10 000 + £10 000) ÷ 2 000 = £10 per unit.

Case‑study – Linking scale to manufacturing method: A school‑bag company forecasts 1 000 units in year 1 and 10 000 units by year 3.

• Year 1: low volume → batch production using CNC‑cut fabric panels; higher per‑unit cost but flexibility for design changes.
• Year 3: high volume → shift to automated roll‑forming and injection‑moulded buckles; lower per‑unit cost and faster turnaround.

Primary vs Secondary Research

Evaluating source credibility (AO1c): consider author expertise, date of publication, purpose (commercial vs. academic), and whether the data have been peer‑reviewed or independently verified.

Citing secondary sources in Component 2: use a consistent referencing style (e.g., Harvard) and include a bibliography at the end of the portfolio.

Steps to Conduct Effective Market Research

1. Define research objectives (e.g., assess demand for a lightweight ergonomic chair).
2. Select research methods – primary, secondary or a mixed approach.
3. Design data‑collection tools – questionnaires, interview guides, observation checklists.
4. Collect data from a representative sample of the target market.
5. Analyse the data using appropriate statistical techniques (mean, median, variance, regression, etc.).
6. Interpret findings in relation to demand, competition, target market, PLC stage and the 4 Ps.
7. Reflection checkpoint (AO3) – map each key finding to a specific design specification (e.g., “price elasticity indicates a target price ≤ £80 → material cost ceiling £12 per unit”).
8. Translate research into a design brief (see example below).
9. Present recommendations to inform design specifications, production scale and commercial strategy.

From Research to Design Brief (Example)

Research shows university students need a portable, adjustable study chair that weighs ≤ 5 kg and costs ≤ £80.

• Maximum weight: 5 kg (demand‑driven functional requirement).
• Adjustability: seat height 400‑500 mm, back‑rest angle 90°‑110° (target‑market ergonomics).
• Material selection: high‑strength aluminium alloy to meet weight and cost targets (price‑product link).
• Production volume: 2 000 units per year → batch‑to‑mass transition, unit cost ≈ £12 (scale‑cost analysis).
• Positioning: “light‑weight, student‑friendly ergonomics” – informs branding, promotion and retail placement.

Connections to Other Syllabus Topics

• Topic 13 – Industrial Practices: market research guides the choice of manufacturing processes, tooling and quality‑control methods.
• Topic 5 – Sustainable Design: research can reveal consumer demand for eco‑friendly products, influencing material selection and life‑cycle assessment.
• Topic 12 – Technology: digital tools (online surveys, data‑analytics software, GIS) enhance data collection and analysis.

Key Terminology (Glossary)

Key Take‑aways

• Market research links design ideas to real‑world commercial viability.
• Demand data underpin realistic sales forecasts, pricing strategy and PLC planning.
• Competitive analysis (including SWOT) drives differentiation, positioning and extension decisions.
• Accurate target‑market profiling ensures resources are focused on the most profitable customers.
• The 4 Ps provide a framework for translating research findings into concrete design specifications, production scale and promotional tactics.