The meaning and types of markets; market size, share and growth; primary and secondary market research; quantitative and qualitative data; sampling and its reliability; and the value and limitations of market research.

What this theme is asking

Eduqas wants you to define a market and its types, measure market size, share and growth, distinguish primary from secondary research and quantitative from qualitative data, understand sampling and why it affects reliability, and judge the value and limitations of market research. These tools let an entrepreneur test demand before committing, and they reappear throughout marketing.

What a market is, and its types

Markets are classified in several ways: mass markets (large, with standardised products, such as soft drinks) versus niche markets (small, specialised segments, such as gluten-free baking); consumer markets (selling to households) versus business-to-business markets (selling to other firms); and local, national or global markets by geographic reach.

Market size, share and growth

Primary and secondary research

Primary research is up to date, specific and exclusive to the firm but is expensive, slow and only as good as its sample. Secondary research is cheap, quick and good for the wider market but may be out of date or not specific to the firm's exact question. Most firms combine the two.

Quantitative and qualitative data

Quantitative data is numerical: how many customers, how much they spend, what share of a sample prefers a product. It is good for spotting patterns and is easy to compare, but it does not explain motives. Qualitative data captures opinions, feelings and reasons (why customers prefer a brand), usually from interviews or focus groups; it gives depth and insight but is harder to measure and generalise. A strong research design uses both: numbers to size the opportunity, opinions to understand it.

Sampling and reliability

A sample is the group of people actually researched, chosen to represent the wider target population, because surveying everyone is impractical. The larger and more representative the sample, the more reliable the results. A random sample gives everyone an equal chance of selection; a quota sample fills set numbers from each group; a stratified sample mirrors the proportions of subgroups in the population. A small or biased sample (for example surveying only passers-by outside one shop) can mislead, which is the main risk in start-up research.

Value and limitations of market research

Research reduces risk by testing demand, price, features and the target market before money is committed, and it provides the evidence a business plan and lenders need. But it has limitations: it costs time and money, samples can be unrepresentative, respondents may not answer honestly or may change their minds, secondary data may be out of date, and the future cannot be predicted with certainty. Research should therefore inform decisions, not make them on its own.

Examples in context

A new gym surveys local residents (primary, quantitative and qualitative) to gauge demand, preferred hours and willingness to pay, and checks national fitness-industry reports (secondary) for trends. A snack brand uses focus groups (qualitative) to understand why shoppers choose rivals, then a large survey (quantitative) to size each segment. An online retailer tracks its own sales data (secondary, internal) to spot which products are growing.

Try this

Q1. A firm sells $\pounds 250{,}000$ in a market worth $\pounds 2{,}000{,}000$. Calculate its market share. [2 marks]

• Cue. $\tfrac{250{,}000}{2{,}000{,}000} \times 100 = 12.5\%$.

Q2. Explain one reason a start-up might rely more on primary than secondary research. [3 marks]

• Cue. Primary research is collected first-hand for the firm's specific purpose, so it gives up-to-date, relevant data on local demand that existing secondary data may not cover.