What’s it: Market research is an effort to collect and explore information about a market, including consumers’ needs and wants. Researchers explore the size, characteristics, and potential of the market, which are essential before developing a new product or service.
Why market research is important
Market research is to provide more in-depth information about the market. It is essential for making decisions and solving problems related to selling a product or service.
Market research seeks to understand consumer needs and preferences and explore information about:
- Market size and profitability
- Market and consumer characteristics, such as age, gender, income, and consumer tastes.
- Growth prospects
- Key segments and niches in the market
- Trends and dynamics of competition in the market
- Customer feedback
Market research is an important step in marketing. It is an essential input in product development and marketing strategies. So, indirectly, market research determines the success of a product in a market.
In general, market research is vital to:
- Explore consumer wants, needs, and preferences. Companies must understand what consumers need before they launch new products. Market research helps companies to identify business gaps and opportunities in the market.
- Analyze competition. Digging up information about the competition is essential to determining potential profits and setting prices. Also, companies can dig deeper into the strengths and weaknesses of competitors.
- Help launch new products or services. Market research information is useful for determining the attributes and prices of new products. Thus, if a company develops a product with the appropriate attributes and prices, it increases its success chances.
- Evaluate the company’s strengths and weaknesses. Market research helps answer why a company’s existing product is in demand, or why it is not? Information is essential for evaluating and taking the next step.
- Help find ways to improve a product or service. Through marketing research, companies can gather information from consumers about their expectations of the company’s products, for example, what features they want.
- Position of business, product, and marketing programs. Marketing research provides essential information about the number of competitors, the variety of products in the market, their prices, strengths, and weaknesses. Such information is useful for positioning products on the market and differentiating the company’s offering from competitors.
- Identify new opportunities. Companies can dig up information about consumers’ unfulfilled desires from products that are currently on the market. They sort such information, develop product prototypes, determine which ones are likely to be successful and profitable, and develop them later.
- Help test concepts for initial testing and evaluation of a product or marketing program. Companies usually want to know the level of consumer response to products before they are actually launched into the market.
Types of market research
Companies collect information from original sources (primary) or secondary sources, each of which has advantages and disadvantages. Broadly speaking, two types of market research are:
- Field research, which produces primary data
- Desk research, which produces secondary data
We call field research primary research. Companies collect data and information directly in several ways. We call the data obtained as primary data because the company is the first hand to collect data.
Some common field research methods are field surveys, face-to-face interviews, online surveys, telephone interviews, and in-person observations.
Primary data is unique. I mean, it’s only available to companies that collect data. Other parties do not have access to use it without company permission.
However, field research is often time-consuming. Besides, it was resource-intensive and expensive to do so.
Under desk research or secondary research, companies use data or information that has been collected by other parties. In other words, the company obtained secondary data.
There are various sources of data or information for desk research. Companies can obtain them from annual reports, press releases, online media, or competitor websites. Other potential sources are from government publications and research institutions.
Desk research is the opposite of field research. Time-saving, less resource-intensive, and relatively inexpensive are among its advantages. Apart from that, companies can also access many data sources.
However, desk research also has some drawbacks. Companies need to select the data they need because not all information is relevant. Some data may be of low quality and prone to bias. Also, secondary data is not unique because competitors can also access the same data.
Marketing research process
Typical marketing research usually includes the following stages:
- Defining the problem, including determining the study’s purpose, relevant background information, and required data.
- Develop approaches to problems such as designing objective or theoretical frameworks, building hypotheses and analytical models, and identifying appropriate variables.
- Choosing the research design includes the type of research (primary or secondary), data collection methods (survey, observation or experiment), sampling, research procedures, and questionnaire design. This stage also includes mapping resource requirements, such as team building.
- Collecting data. The process depends on the type of research to be carried out, whether primary or secondary. The team may have to interview selected respondents if the company chooses the survey as the research method. It requires proper selection, training, supervision, and evaluation of team members to minimize data collection errors.
- Process and analyze data such as editing, transcription, verification, and data cleaning. The processed data then enters the analysis stage. Companies can use descriptive statistics such as graphs and tables or inference statistics such as simple and multivariate regression. The type of analysis method also depends on the type of data collected, whether qualitative or quantitative.
- Prepare a report or presentation of the main results and findings.