What is Market Research
Definition. Market research is the process of gathering, analyzing and interpreting information about the market, products, and services, consumers and competitors to have a bird’s-eye view and make a more informed decision. It is considered necessary for successful business planning.
Business conduct market research for different reasons, for example, looking for new markets and prospects, testing new products and services, business innovation, product placement and the industry as a whole.
Importance of Market Research
Acquiring new customers and sales is the main focus of every business; market research ensures both of that. Whether it’s a sole proprietorship or a large corporation, market research is equally important for every business. Here are some of the following reasons why it’s important;
Identify Problem Areas in Business
Market research helps us to look for some new opportunities that our business is lacking. Once the market research is finished, then it becomes clear to us about our targeted customers and how we can approach them. There at this point, you’ll see the problems and the opportunities to manage those problematic areas. For example, it would require you to be partnered up with other businesses. Or the new sale location, or add some product bundle offer.
Minimize Business Risks
Having said earlier that new customers and a steady flow of sales is the main focus of every business; market research helps you to find those opportunities with minimum risk involved to achieve your market goal. However, you can minimize the risk by the number of ways like; test the product or service before launching it into the market. If your product is failing, then it would answer the questions like why your customers aren’t coming back. It would also give you a clear insight of the problem, if the sale has started dropping, then it would give you the suggestions like lower quality, problem in the site or distribution channel is taking more time.
Well-informed Business Decisions
When you know your problems and you also know how you can solve them by using the minimum risk. For instance, who and where your customers are and why they are dissatisfied; whether to launch a new product or discontinue the old product or service; or make some improvement in the existing product. In other words, you have all the necessary ingredients to make a clear business decision.
New Areas for Expansion
One of the major problems that all the business face while advertising is exactness. They don’t exactly know which audience to target. Market research tells you the demographics of your audience, their nationality, their language, and culture. Once you know your targeted market, now you can target your customers by using the paid ads tool of social media. For instance, separate ads for students on campus, completely different ads for single dads, pregnant ladies, and single moms. Market research allows you to follow a separate approach for each separate niche.
The market research gives you a clear idea about market trends like what problems people are facing and how you can solve them. The interest of people these days; whether they are playing video games or watching movies, which niche is more competitive; people want necessity products or want a luxury product and service.
Market research provides you a detailed SWOT analysis like strengths, weaknesses, opportunities, and threats of business. With the help of internal and external analysis, you can make a better decision.
Political, economic, social, technology, legal and environmental are known as the external factors that can affect your business operations and performance. Market research provides you a well-detailed PESTLE analysis about the environment in which you are running your business.
Methods of Market Research
We have been talking about market research; now the question is how we can perform market research. However, there are two methods of market research, primary and secondary.
Primary Market Research Methods
As the name implies primary method means that collecting the information by using the direct and primary source because it involves an in-depth analysis of some particular problem or an issue. Some of the important primary market research methods are given below;
Either conducting a face to face interview or a telephonic interview; it’s an open-ended and two-way process in which the interviewer and the interview can both ask questions. Now the success of the interview depends on the quality of questions asked by the researchers. Focus only on those points where you need information, omit rest.
A form with a list of checkpoints is sent to the audience either via email or direct message to get the feedback of the people. Some organizations offer rewards after the online survey, the purpose is to keep the interest level up. Online surveys shouldn’t be too lengthy, so the people would leave the form without even finishing and it should be made interesting.
It is a very famous method used by businesses to observe views of experts from different fields; a focus group involves 6 to 10 people. Moderation starts the discussion and stimulates it from time to time; views, gestures and body language of the people are observed. Businesses learn which niche to focus on.
Observation also falls in the category of primary research method, but it doesn’t involve a direct connection between the observer and the subject. Bakery is the most common example; where cameras are installed at different locations, at which product customer spends more time is observed.
Secondary Market Research Methods
The secondary market research method means that information is collected by using the already existing data. Research reports and other documents similar to this are common examples of the secondary method. Some of the important methods of secondary market research are given below;
Data available on the Internet
Googling or internet surfing is a very common method of secondary data collection. Thousands of websites are there online to provide information on almost every topic. The best thing about this method is that it is free.
Government & Non-government agencies
Government, non-government agencies and small business centers are also a great source of secondary data collection source; where you just have to pay a certain price to get the relevant information and data that you require. Data obtained from such organizations is usually considered authentic and trustworthy.
TV stations, magazines, newspapers, Radio, and journals also fall in the category of secondary commercial data collection sources. These sources usually have the direct and first-hand link with the information. Commercial sources have a vast range of data, businesses, and organizations that want to collection collect data from these sources, and then they have to be specific about their category.
Types of Market Research
When a business wants to know the behavior and buying pattern of the customer of their target market, then researchers perform different types of studies and use different tools to get the required results. Types of market research are as follows;
Primary research means that the researcher is in direct contact with the targeted customer. Companies usually hire third parties to conduct primary market research for them. Data collected from primary research could be quantitative (numerical) or qualitative (non-numerical) depending on the planning and question prepared by the researcher.
Secondary research is comprised of outside sources like the chamber of commerce, government, media, agencies, etc. Information from such sources is usually published on websites, newspapers, journals, TV channels, radio, etc. We can categories the secondary sources into three main domains; public source, educational institutions, and commercial sources.
Quantitative market research is a type and method like surveys, focus groups, observation, interviews, poles, online questioners and phone surveys. As the name implies that the data collected from the quantitative research is in the form of figures and numbers.
Qualitative market research is also like quantitative type and methods like surveys, focus groups, observation, interviews, poles, online questioners and phone surveys. But in the qualitative market research, data is collected in the exploratory and open-ended which can be interpreted later on.
In the descriptive type of market research, the focus is to find the accurate and correct answer about the market problems. The following types of questions are focused, for instance, how is the consumption of our product? What type of people buying our product? What exactly are the targeted buyers of our product?
In the exploratory type of market research, researchers usually have basic and clear knowledge about the issue but research is conducted to get a better insight into the problem. The researcher must be clear about his ideas; irrelevant and impractical ideas should be avoided.
In the causal type of market research, the relation between cause and effect and variable is established to observe the changes. If the packaging is changed of a certain product; then how it will affect the product sale and its durability.
Market Research Process
We live in a very competitive business world where the market keeps on changing; high sales at one time and zero in the next month. When businesses face such issues, then market research is performed. However, market research is a step by step process, it starts with;
Define the problem
First of all, the main focus is to find out the exact problem. Finding the exact problem is the key to the success of market research.
Develop Market Research Plan
Once the problem is identified, the next step is to develop a plan that how you’re going to conduct market research.
Once the plan is laid out for the market research, collect relevant data that is helping the market research plan and answer the problem defined earlier.
Analyze the Data
When you have sufficient data collection to answer questions; now analyze the data to see if any pattern is being formed. If it does, then what it means to research.
Present the Data
If you see any patterns being developed, now put on the paper to see it clearly, or draw a graph or chart to find some relevancy.
At this stage, you know the answers based on the information available to you. If your answers address the questions of the stage, then take action and apply the plan.