Exam technique: purposes of market research

A purpose of market research is the reason an entrepreneur carries it out: why they do it, not how. A method such as a questionnaire or an interview is how information is collected, so naming a method does not give a purpose.

Two different purposes

When you are asked to state two purposes, give two different reasons, because each correct purpose earns one mark. They must be genuinely distinct: gaining customers' views and understanding customers' wants are too close to count as two, while reducing risk and aiding decision making are different and can earn a mark each. A purpose must explain why research helps: 'to get more customers' or 'to make more profit' are outcomes, and only count once you say how research leads to them.

A purpose applied to a business

When you are asked to explain, give the purpose and then apply it to the business in front of you. Each purpose developed in context can earn two marks: one for the purpose, one for the application. For example, an entrepreneur planning a pop-up stall selling handmade phone charms at a summer fair could write: 'Market research would reduce risk by showing which designs local teenagers actually want, so money is not spent on boxes of beads and charms few people buy.' That links the purpose to a decision and a benefit. Repeating the purpose in different words earns the first mark only.

Reason and stage

When you are asked why or when an entrepreneur needs market research, focus on the reason and the stage, such as before launching a good or service, rather than on how information is collected. Use specification terms accurately, for example reduce risk, understand customers' needs and wants or inform product development.