Discuss the usefulness to a furniture retailer of using secondary market research when planning to enter a new market.
CAMBRIDGE
A level and AS level
Year Examined
May/June 2022
Topic
Market Research
👑Complete Model Essay
What is Secondary Market Research and its Usefulness for a Furniture Retailer Entering a New Market?
Secondary market research involves the gathering and analysis of pre-existing data collected by other organizations or individuals for purposes often unrelated to the specific needs of the user. This essay will discuss the usefulness of secondary market research for a furniture retailer planning to enter a new market, considering both its advantages and limitations.
Understanding Secondary Market Research and New Markets
Secondary market research encompasses data gathered from various sources, including government publications, trade journals, market research reports, and online databases. For a furniture retailer, a new market could constitute a geographically different location or a new demographic, such as a younger age group with distinct furniture preferences.
Advantages of Secondary Market Research
Secondary market research offers several potential advantages. Firstly, it can provide valuable insights into market trends, consumer behavior, and competitor analysis at a relatively low cost compared to primary research. For instance, a furniture retailer looking to expand into a new country can access existing market reports on furniture preferences, popular styles, and pricing strategies in that region. This information can help the retailer tailor their product offerings and marketing campaigns to better suit the target market.
Limitations and Challenges of Secondary Market Research
Despite its advantages, secondary market research has limitations. The data may not be entirely relevant to the specific furniture products or target customers of the retailer. For example, a report on general furniture trends might not provide specific information about the demand for eco-friendly and sustainable furniture, which might be a key focus for the retailer. Additionally, data collected for a different purpose might lack the specific details or focus required by the furniture retailer.
Importance of Data Relevance and Timeliness
The usefulness of secondary market research relies heavily on the relevance and timeliness of the data. Outdated information could lead to flawed business decisions. For example, relying on pre-pandemic data on furniture buying habits might not accurately reflect the shift towards home office furniture and online purchasing that occurred during the pandemic.
Evaluating the Overall Usefulness
The effectiveness of secondary market research for a furniture retailer entering a new market depends on several factors. When existing information about the new market is limited, conducting primary research focused on the specific product and target consumers might be necessary.
The usefulness hinges on the similarity between the new market and the group studied in the secondary research. Suppose a furniture retailer plans to target a young, urban demographic in a new city. Using secondary data collected from a suburban population with different lifestyles and furniture preferences might not be entirely accurate.
Conclusion
Secondary market research can be a valuable tool for furniture retailers entering a new market, offering cost-effective insights into market trends and consumer behavior. However, retailers must critically evaluate the relevance, timeliness, and specificity of the data to their target market and product offerings. In many cases, combining secondary research with targeted primary research might be the most effective approach to gathering comprehensive and actionable insights for successful market entry.
Discuss the usefulness to a furniture retailer of using secondary market research when planning to enter a new market.
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Introduction
This guide will provide you with the skills and knowledge necessary to write a strong A-level Business Studies essay on the usefulness of secondary market research for a furniture retailer entering a new market. It will cover the key aspects of secondary market research, its application to furniture retailing, and its strengths and limitations.
Understanding Secondary Market Research
Secondary market research involves gathering information that has already been collected by someone else. This can include data from government sources, industry reports, trade journals, or even competitors' websites.
When a furniture retailer aims to enter a new market, it could be either:
- A new geographical market: Expanding to a new city, region, or country.
- A new demographic market: Targeting a new customer segment based on age, income, lifestyle, etc.
How Secondary Market Research Can Be Useful
Secondary market research can be a valuable tool for furniture retailers entering a new market. Here's how:
- Market Size and Growth Potential: Secondary research can provide insights into the size of the furniture market in the new location and its growth potential. This helps the retailer understand if there is sufficient demand to justify the expansion.
- Consumer Trends: Reports and studies may offer information on consumer preferences for furniture styles, materials, and price points. This helps the retailer tailor its product offerings to the new market.
- Competitor Analysis: By studying competitors' activities, secondary market research can reveal their pricing strategies, product offerings, and marketing tactics. This helps the retailer develop effective competitive strategies.
- Economic and Social Factors: Secondary research can provide details about the economic climate, cultural preferences, and lifestyle trends in the new market, aiding in marketing and pricing decisions.
Limitations of Secondary Market Research
While useful, secondary market research has limitations that a furniture retailer must consider:
- Relevance: Not all secondary research data is directly relevant to the specific type of furniture the retailer offers or the target market they are entering.
- Outdated Information: Secondary data can become outdated quickly. It's crucial to ensure the information is recent and still applicable.
- Lack of Specificity: Secondary research often provides broad market trends. It might not be detailed enough to understand the specific preferences and needs of the retailer's target audience in the new market.
Evaluation and Conclusion
The usefulness of secondary market research largely depends on the following factors:
- The quality and recency of the research: More reliable and up-to-date data provides a stronger foundation for decision-making.
- The similarity between the new market and the cohort used for the secondary market research: If the target market is significantly different, the research might not be as applicable.
- The availability of other research methods: If resources permit, primary research such as surveys or focus groups can provide more tailored insights into the new market.
While secondary market research offers valuable insights, it is crucial to acknowledge its limitations. A furniture retailer should integrate it with other research methods and exercise caution in interpreting its findings.
Extracts from Mark Schemes
Discuss the usefulness to a furniture retailer of using secondary market research when planning to enter a new market.
Answers could include:
Knowledge and Understanding (2 marks)
· Clear understanding of what secondary market research is
· Candidates might also Explain what could be a new market.
Application (2 marks)
· Appropriate reference to entering into a new market e.g., the new market could be a new geographical market or a new demographic i.e., age group or income level.
· Specific reference to a furniture product e.g., chairs/tables.
Analysis (2 marks)
· Secondary market research might not be completely relevant to a business.
· The collected data might not be directly relevant to furniture or specifically to the type/style of furniture being offered by this business
· The data has, by definition, been collected for another purpose and might not be relevant to this business proposal
· Managers need to know how old the market research information is
· A business might not be offering the same type of furniture to this new market or wants to discover the needs and preferred style of the new market in which case secondary market research is likely to be of little use.
Evaluation (6 marks)
Any judgements/conclusions can be made at any point in the essay, not just in a concluding section.
A judgement might be made that usefulness might depend on the following:
· If there is only limited information about the new market, might it be more appropriate for a business to carry out some primary research that has a focus on the product and the intended consumers?
· The usefulness of secondary market research might depend on the similarity between the proposed new market and the cohort used for the secondary market research
· If a business wants to find out the preferences of the new market, then it is more essential that primary market research should be undertaken
· The usefulness will depend on the quality of the research already conducted and also the length of time since the information was collected
· It might be that secondary market research is all that a business can afford and therefore is better than no research at all.
· Will the furniture demanded in another market, either geographic or demographic, be very different? This will depend on the extent to which designs etc. differ between markets. If there is little difference, then the secondary market research could be adequate and save money for a business