Module 2: Market Research, Market Opportunity Recognition, and Target Market 2.6 Quiz Exam Answers

1. Joe owns a popular restaurant and is considering adding a new salad item for the winter menu. Adding an avocado salad would require a considerable investment in avocados. Which example of secondary research may help Joe decide if the avocado salad is a good idea?

• Calculating the percentage of people who eat salad in the restaurant by observing the number of tables that order salads/total number of tables.
• Test marketing the avocado salad as a special menu item one evening.
• Sending employees secretly to other restaurants to see what’s on their salad menu.
• Researching the cost and expected availability of avocados at the California Avocado Commission.

This option is an example of secondary research because it involves gathering existing data from an external source, rather than collecting new, firsthand information. By researching published data or reports from the California Avocado Commission, Joe can access already compiled information on avocado costs and availability. This allows him to evaluate the feasibility of investing in avocados for his new salad without incurring the time and expense of conducting primary research such as surveys or test marketing.

2. Joe owns a popular restaurant and is considering adding a new salad item for the winter menu. Adding an avocado salad would require a considerable investment in avocados. Which example of primary research may help Joe decide if the avocado salad is a good idea?

• Finding out the percentage of people worldwide who are allergic to avocados.
• Test marketing the avocado salad as a special menu item one evening.
• Investigating avocado farming techniques.
• Researching the cost and expected availability of avocados at the California Avocado Commission.

This option represents primary research because it involves collecting new, firsthand data directly from potential customers. By introducing the avocado salad on a trial basis, Joe can observe consumer reactions, gather feedback, and assess actual demand. This real-time, direct observation provides valuable insights into whether the new salad would perform well on his menu, making it a clear example of primary research.

3. A luxury clothing store has seen a large downward trend in sales and hired a consulting firm to help them address the decline. The consulting firm has no initial idea of what is causing the slipping sales. What may be a good first step?

• Design a new marketing campaign to drive up sales.
• Arrange focus groups from the store’s target market to investigate the cause of the decline.
• Recommend lowering the prices of the merchandise to match those of non-luxury stores.
• Recommend changing the store’s marketing strategy to match other, more successful clothing stores.

Starting with focus groups allows the consulting firm to directly gather insights from the luxury store’s target customers. By facilitating a discussion with potential buyers, the firm can explore perceptions, preferences, and potential reasons behind the declining sales. This primary research helps identify specific issues or shifts in consumer behavior that might not be apparent from secondary data, thereby forming a solid basis for subsequent strategic recommendations.

4. A well-established cola company would like to change from its original recipe to one that it hopes will be more popular among younger soda drinkers, while still maintaining the older market. What would be an appropriate research design?

• Test market the new recipe to observe consumer response.
• Send out a survey by mail to gauge how consumers feel about the company tinkering with the beloved recipe.
• Perform quantitative analysis of the existing sales data.
• Make the recipe switch and observe consumer response. They can always change the recipe back if sales dip.

Test marketing is a practical research design that allows the company to introduce the new recipe on a limited scale. This approach gathers firsthand data on consumer reactions from both younger and older demographics before committing to a full-scale launch. It minimizes risk by providing an opportunity to make adjustments based on real-world performance and consumer feedback, rather than relying solely on surveys or secondary data.

5. A cell phone company (Company A) would like to get information about why potential customers choose their competitor (Company B).
How might they get that information?

• Send out a survey to all their potential customers, with true/false questions about Company B’s products.
• Send out a survey to all their current customers, with true/false questions about Company B’s products.
• Hold focus groups to discuss what people like about Company A.
• Hold focus groups to discuss what people like about Company B.

Conducting focus groups provides an opportunity for in-depth, qualitative insights directly from potential customers. By asking participants what they like about Company B, Company A can uncover specific factors—such as product features, pricing strategies, or brand perceptions—that influence customer preferences. This method is more effective than a survey with limited true/false questions, as it encourages detailed discussion and reveals nuanced opinions that can inform strategic improvements.

6. A cell phone company is considering a new low-cost plan with low data and texting limits. They successfully conduct a survey of current and potential customers and find very little interest in such a plan. What should they do?

• Accept the survey results, redesign the plan, and try again.
• Create a large ad campaign and let the marketing sell the new plan.
• Randomly select customers and put them on the new plan and get their feedback.
• Send the same survey out to more people. Maybe the results will be different.

Since the survey of both current and potential customers indicated very little interest in the proposed low-cost plan, it suggests that the plan does not meet market demand or customer expectations. Relying on additional surveys or launching an ad campaign without modifying the product might lead to further resource wastage. Instead, using the survey data to inform a redesign allows the company to adjust the features—perhaps by increasing data or texting limits or offering additional benefits—to better align with consumer preferences before reintroducing the plan to the market.

7. A marketing company would like information on the societal concerns of Gen Z. What might be a good source of secondary research?

• Pew Research Center
• Pew Hispanic Center
• Nielsen TV
• The Census Bureau

The Pew Research Center is renowned for its comprehensive studies on social trends, attitudes, and behaviors across different demographic groups, including Gen Z. Their research offers valuable insights into the societal concerns and priorities of this generation. While the other sources provide useful data in specific areas, Pew Research Center is best suited for understanding broad societal issues among Gen Z.

8. What type of information is provided by the Census Bureau?

• Monthly survey of US households on labor data.
• Consumer research, trends, and insights.
• US economic, demographic, geographic, and social data.
• US industry trends.

9. A software company has developed a new project management tool for small businesses. Which of the following best defines the serviceable available market for this product?

• All businesses worldwide
• Small businesses that currently use a different project management tool
• All businesses in the technology industry
• Small businesses that have a need for a project management tool

The serviceable available market (SAM) represents the segment of the overall market that a product can realistically target and serve. In this case, while the overall market might include all businesses or even all small businesses, the SAM specifically focuses on those small businesses that have a need for a project management tool. This group is most likely to be receptive to the new software, making it the most accurate definition of the serviceable available market for the product.

10. A clothing company wants to launch a new line of streetwear aimed at urban millennials. Which of the following best defines the target market for this product line?

• All consumers who are interested in streetwear
• People aged 25-40 who live in cities and have an interest in fashion
• Individuals who have a high income and are interested in designer clothing
• Anyone who is interested in buying clothes online

This option specifically targets urban millennials—the intended demographic for the streetwear line. It refines the audience to those likely to resonate with the product’s style and cultural appeal by focusing on age, urban living, and an interest in fashion, which aligns well with the company’s marketing objectives.