Enterprise and Entrepreneurial Management. Module Leader : Steve McDonald Module Tutor : Dorothy Hawkins

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1 Enterprise and Entrepreneurial Management Module Leader : Steve McDonald Module Tutor : Dorothy Hawkins

2 Enterprise and Entrepreneurial Management - MOD Customers Market Research

3 Aims of the lecture To explore how firms collect and analyse data on customers and markets To consider some techniques for applying market research theory to a start-up situation In particular to consider the questionnaire as a market research tool

4 MARKET RESEARCH - SECONDARY Many, many sources some more up-to-date and reliable than others A huge amount of data can be difficult to manage Trade journals (free or low cost) often carry overviews of expensive research reports Data was probably not collected for your purpose

5 MARKET RESEARCH - PRIMARY Difficult for first-time entrepreneur unless can afford to use an experienced agency (very expensive) Accuracy of sample? Asking the wrong questions? Failing to ask the right questions? Bias in questions and or interpretation?

6 QUANTITATIVE DATA Requires a large enough sample to be statistically valid Provides answers to factual questions but does not answer Why? in any depth Requires VERY accurate sampling so that research results can be extrapolated to whole segment

7 QUALITATIVE DATA In-depth research into motivations and attitudes Can reveal the importance of image/peer pressure Does not produce valid statistics Requires skilled interpretation May reveal the unexpected!

8 METHODS OF COLLECTING PRIMARY DATA Observation Questionnaire face-to-face, telephone, internet Interview Focus group Feedback from staff Feedback from customers / loyalty cards Consider : cost, time, skill level of researcher, probable response rate

9 B2C Business to Consumer Many buyers Buyers influenced by benefits to individual / family Mass communication easier targeting Some impulse purchases Branding perhaps more important

10 B2B Business to Business - Fewer buyers and more business-aware so sales promotion may be less relevant/useful - Buyers influenced by functional benefits - Targeting much more difficult so many more (and different) types of media and message to reach decision-makers - Often extended decision-making (slower) - Branding can be less important (but business buyers are also people!).

11 THE MARKET RESEARCH SAMPLE SAMPLING IS HUGELY IMPORTANT INACCURATE SAMPLE = INACCURATE RESEARCH Consider : the sampling method the sample size

12 RANDOM SAMPLING Everyone in the population has an equal chance of selection A truly random sample is very difficult to achieve Research companies often use the electoral register, but...

13 STRATIFIED RANDOM SAMPLING Only those with a key characteristic are randomly sampled For example : women aged between 30 and 40 years students currently at university men with beards

14 QUOTA SAMPLING Respondents are selected in proportion to the customer profile within the target market. For example : if adult chocolate buyers are 40% men and 60% women, then from a sample of 200 adults the selection would be 80 men and 120 women. This is the most commonly used method BUT depends upon accurate profiling of the target market.

15 QUESTIONNAIRES More likely to be used for quantitative research Much more difficult than it first appears because it is very easy to write questions that influence the answers Respondents are commonly required to scale their answers Constant sum scales require respondents to allocate a given number of points Likert scales require respondents to state their level of agreement with a series of statements.

16 CONSTANT SUM SCALE EXAMPLE Below are four characteristics of mobile phones. Please allocate 100 points among the characteristics to represent their importance to you: the higher the number, the more important the characteristic. Please ensure you allocate 100 points. Characteristics of Mobile Phones Has many accessories Has a long battery life Is stylish Is the brand I prefer Number of points = 100 points

17 LIKERT SCALE EXAMPLE For each of the following statements please tick to show whether you strongly agree, agree, neither agree nor disagree, disagree or strongly disagree. The phone is easy to use The phone is stylish The keys are too small I would look good with this phone Strongly Agree Neither Disagree Strongly agree agree nor disagree disagree

18 A GOOD QUESTIONNAIRE Clearly defined research objectives Minimise bias (no leading questions) Clear questions most important if self-completion Adapt typeface and style to respondents Logical order Start or finish with full demographic details (age, gender, etc) ALWAYS pilot a questionnaire before using for the full research

19 SOME USEFUL READING Wilson, Alan (2006) Marketing Research An Integrated Approach. Harlow: Prentice Hall Chapter 7 is an excellent source on designing questionnaires Chapter 8 gives a clear description and explanation of sampling methods The text lists full references.

20 SOME USEFUL READING As always, the relevant section in the module text is aimed directly at your assignment and contains an excellent reference list. Key text: McDonald, S. and Hawkins, D. (eds) Enterprise and Entrepreneurial Management. Harlow: Pearson Education Ltd pp

21 This week s seminar You should have read Week 5 in the key text to prepare for your seminar this week.

Enterprise and Entrepreneurial Management. Module Leader : Steve McDonald Module Tutor : Dorothy Hawkins

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