2.4. Market changes

Information on sales

The aim of market research is to identify market opportunities. An important aspect of research is to track sales in order to try to identify those products which are likely to experience rising sales and those which for which sales are declining. Falling sales indicate falling profitability and declining market opportunities. Rising sales indicate an opportunity to expand market share and profits in the long run.

Consumer spending patterns

Of particular interest to market researchers is how consumer spending patterns change over time. For example, between 1957 and 1992 expenditure on food as a percentage of total household expenditure fell from around 34% to 17.5%. However, households are now devoting more of their total expenditure to housing, which has risen from 8.7% of household expenditure to 17.4% in 1992. This is a reflection of the trend towards 'owner occupation' resulting from rising incomes and the aspiration of people to own their own house. The average weekly household income in 1957 was just 18 pounds, compared to around 343 pounds in 1992.

However, changes in consumer spending patterns cannot be explained only by the increase in household incomes over time. New products such as videos, camcorders, and compact discs have become available for consumers to want and buy.

There have also been significant cultural and social changes. For example, mainland Europeans, such as the French and Italians, are often characterised as lovers of good food and wine. It is suggested that the increase in foreign travel by UK residents has allowed them to sample and enjoy these aspects of European culture, and this has resulted in the increase in the consumption of wine and meals at restaurants in the UK.

Increasingly consumer spending decisions are linked to the moral views of consumers. Nowhere is this more evident than in the market for ‘green’ or environmentally friendly products.

Market research suggests that the 1990s could be the decade of the green consumer. When the Consumers’ Association surveyed readers of Which? magazine, 90% said they were concerned about environmental pollution. Surveys by the market research group Taylor Nelson Applied Futures suggest that 36% of British people subscribe to attitudes which make them green consumers. Research suggests that they are the fastest-growing group in the population.

Test Questions

1. A company decides to undertake primary research because it:

1. Is simple to collect

2. Is low cost

3. Provides qualitative information

4. Can be tailored to suit the research

Questions 2 – 4 share the following answer options:

The following are examples of research methods:

1. Telephone interviews

2. Postal surveys

3. Electronic monitoring

4. Face-to-face interviews

Which method would you advise a firm to use in the following situations?

2. When an instant response is required to test a TV advertising campaign

3. When the background to the research needs to be explained in full and requires detailed understanding

4. When respondents wish to remain totally anonymous

Questions 5 – 7 concern the following information:

A DIY superstore intends to carry out some market research. It has identified the following possible methods:

1. Desk-based research

2. Interviews

3. Observation

4. Electronic monitoring

Which method should the store choose if:

5. They want to calculate their share of the total DIY market?

6. They want to find out what people buy, and why?

7. They want to find out patterns of movement around aisles in the store?

8. Which of the following is not an example of a secondary source of data?