What is the role of marketing, and how does a business research its market and its customers?
The role and benefits of marketing, the identification of customers through market segmentation, the difference between field and desk research, and the main methods of primary market research used to gather customer information.
A focused answer to the SQA National 5 Business Management content on marketing and market research, covering the role and benefits of marketing, identifying customers through market segmentation, the difference between field (primary) and desk (secondary) research, and the main methods of primary market research.
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What this dot point is asking
The SQA wants you to explain the role of marketing, how a business identifies customers by market segmentation, the difference between field and desk research, and the main methods of market research. These ideas set up the marketing mix, so learn the terms precisely.
The role and benefits of marketing
Marketing is everything a business does to identify, anticipate and satisfy customer needs and wants in order to make a profit. It is not just advertising: it covers researching the market, designing the product, setting the price, choosing where to sell and promoting it.
Identifying customers: market segmentation
A business cannot satisfy everyone, so it divides the market into segments, groups of customers with similar characteristics, and targets the ones it can serve best.
Common ways to segment a market include: age (children, teenagers, adults), gender, income (budget or luxury buyers), geographic location (region or country), and lifestyle or interests (for example sporty or eco-conscious customers). Once a segment is chosen, the business designs the product, price, place and promotion to suit it.
Field research and desk research
To make good decisions a business needs information, gathered through market research. There are two types.
- Field research (primary research): brand-new information collected first hand by the business for a specific purpose. It is accurate, up to date and relevant to the firm, but slower and more expensive to collect, and only the business has it.
- Desk research (secondary research): information that already exists, gathered by someone else or by the business in the past, such as government statistics, market reports, the internet, and the firm's own sales records. It is cheaper and quicker to obtain, but may be out of date, less relevant, or available to competitors too.
Methods of market research
Most named methods are forms of field (primary) research:
- Questionnaire: a set of written questions for many respondents; cheap and gathers a lot of data, but answers can be rushed.
- Personal interview: face-to-face questioning; allows follow-up and detailed answers, but is slow and costly.
- Telephone survey: questions asked by phone; quick and reaches many people, but many refuse to take part.
- Postal survey: questionnaires sent by post; reaches a wide area, but response rates are low.
- Focus group: a small group discusses the product; gives rich opinions and reasons, but the views may not represent everyone.
- Consumer panel: a chosen group gives feedback over time; tracks changing views, but takes commitment.
- Hall test: customers try a product in a venue and give feedback; good for testing a new product, but the setting is artificial.
- Observation: watching how customers behave, for example in a shop; gives honest, real behaviour, but does not explain why.
Try this
Q1. Identify two ways a market can be segmented. [1 mark]
- Cue. Any two of: age, gender, income, location, lifestyle.
Q2. Describe one advantage and one disadvantage of using a questionnaire. [2 marks]
- Cue. Advantage: cheap and gathers a lot of data quickly. Disadvantage: answers can be rushed or dishonest.
Q3. Outline one benefit to a business of carrying out market research before launching a product. [2 marks]
- Cue. It reveals what customers want, reducing the risk of launching a product that fails and wasting money.
Exam-style practice questions
Practice questions written in the style of SQA exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
SQA-style Describe4 marksDescribe methods of market research a business could use to find out what its customers want.Show worked answer →
Award 1 mark per method correctly described, up to 4. A questionnaire is a set of written questions given to many people, which gathers a large amount of data quickly and cheaply (1). A personal interview asks questions face to face, which allows follow-up questions and detailed answers but takes time (1). A focus group brings a small group together to discuss the product, giving rich opinions and reasons (1). Observation watches how customers behave in a shop without asking them, which gives honest, real behaviour (1). Other valid methods include telephone survey, postal survey, consumer panel and hall test. Markers reward described methods, not just a list of names.
SQA-style Distinguish4 marksDistinguish between field research and desk research.Show worked answer →
Award marks for differences shown with a linking word, up to 4. Field research (primary research) gathers brand-new information first hand for a specific purpose, for example through questionnaires or interviews, whereas desk research (secondary research) uses information that already exists, such as government statistics or internal sales records (1). Field research is more expensive and slower to collect because the business does it itself, however desk research is cheaper and quicker because the data is already available (1). Field research is up to date and exactly relevant to the business, whereas desk research may be out of date or collected for a different purpose (1). A final mark is available for noting that field research is specific to the firm while desk research can also be seen by competitors (1).
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Sources & how we know this
- National 5 Business Management Course Specification — SQA (2024)