3.2 Market Research

2026 Syllabus Objectives

By the end of this topic, you should be able to:

  1. Identify the main features of a market: size, growth, and competitors
  2. Identify customer and consumer characteristics, profiles, wants and needs
  3. Distinguish between primary research and secondary research, and explain the main features of each
  4. Explain the usefulness of data collected using primary research methods
  5. Explain the usefulness of data collected from secondary research sources
  6. Explain the need for sampling and its limitations
  7. Assess the reliability of data collected
  8. Analyse quantitative and qualitative data
  9. Interpret information presented in tables, charts and graphs

1. Main Features of a Market

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Before a business can sell anything, it needs to understand the market it is entering. A market is simply the place (physical or online) where buyers and sellers come together. Every market has three key features a business must study.

Market Size

Market size refers to the total value or volume of all sales made by every business within a particular market.

  • It can be measured in two ways:
    • Sales volume — the total number of units sold (e.g. 5.9 million vinyl records)
    • Sales value — the total amount of money spent (e.g. £159 million worth of vinyl records)
  • A larger market means more potential customers and more chances to earn revenue.
  • Knowing the market size helps a business decide whether it is worth entering — if the market is very small, there may not be enough customers to make a profit.
  • A large or growing market is also more attractive to investors, because it promises better financial returns.

Market Growth

Market growth shows how quickly the total size of a market is increasing (or decreasing) over time. It is expressed as a percentage.

Formula:

Market Growth (%)=Market size this year−Market size last yearMarket size last year×100\text{Market Growth (\%)} = \frac{\text{Market size this year} - \text{Market size last year}}{\text{Market size last year}} \times 100

Worked Example:

Oat milk sales were £155m in 2020 and £275m in 2024. What is the percentage market growth?

Step 1: £275m − £155m = £120m (the increase) Step 2: £120m ÷ £155m = 0.7742 Step 3: 0.7742 × 100 = 77.42%

Why market growth matters:

  • In a growing market, more customers are entering all the time, so new businesses can win sales without having to steal customers from rivals.
  • Competition tends to be less aggressive in a growing market, which means businesses do not have to slash prices to survive.
  • A growing market signals long-term potential — businesses can plan for expansion and build customer loyalty early.

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