What’s it: Marketing research is the efforts of systematically collecting and analyzing markets to support more effective marketing decision making. The stages usually include setting objectives, designing research and methods, collecting data, analyzing data, and reporting research results.
Why marketing research is important
Companies need accurate and current information about the marketing environment’s conditions to develop an effective marketing strategy. Demand and competition in the market continue to change from time to time, including about:
- Trending tastes and needs of consumers – for example, people are getting online and leaving conventional media such as print newspapers.
- Changes in the macro-environment, be it political, economic, social, technological, environmental, or regulatory. For example, technology enables companies to explore more data about consumers. Or, COVID-19 can make the economy crash and reduce outdoor activities.
- Competitive dynamics – for example, globalization brings more fierce competition because companies are not only competing with local companies but also globally.
Such changes present both threats and opportunities. Competitive advantage can turn into a disadvantage because companies do not adapt to such changes. They need different strategies and tactics to support a sustainable competitive advantage.
Marketing research objectives
Marketing research aims to identify challenges and opportunities to achieve marketing goals. Companies process data, analyze data, and interpret relevant facts to provide valuable information about it.
Research results also help companies plan, evaluate, and develop marketing strategies and tactics. Management uses it in decision making related to exploiting opportunities, minimizing threats, designing alternative actions, and solving marketing problems.
Meanwhile, the specific objectives of marketing research are:
- Understand what consumers need today – as consumer tastes and preferences change, companies may need different marketing strategies.
- Identifying market gaps – the company may find opportunities to develop new products, which are not being served by products currently on the market.
- Reducing product failure – marketing research information is useful for developing the right marketing mix, so it is profitable and better than competitors.
- Minimizing business risk – companies use research results to anticipate and develop appropriate responses to address threats in their business environment.
- Forecasting future trends – the company anticipates future consumer needs, so it is one step ahead of competitors exploiting market opportunities.
Types of marketing research
Marketing research covers three research areas:
- Market research: about the market, such as market size, profitability level, growth prospects, and competition intensity.
- Product research: about the characteristics and attributes of the right product to satisfy customers
- Consumer research: about consumer needs, tastes, preferences, attitudes, and behavior.
Marketing research can be causal, exploratory, or descriptive.
Causality research is when companies are trying to understand the cause-and-effect relationship of a phenomenon. For example, how much does a company’s advertising affect customer perception?
Descriptive research seeks to understand more about the nature or characteristics of the phenomenon itself. For example, companies try to understand the shopping habits of consumers when they go to the mall.
Exploratory research seeks to understand phenomena more profoundly and is usually useful for developing new products. For example, a company explores the shopping experience to gain insight into what first-time consumers see when shopping, whether price, packaging, store atmosphere, or brand.
Marketing research steps
The marketing stages usually include:
First, determine the problem or research objective. Marketing research covers various aspects of the market, such as product, sales, promotion, distribution, buyer behavior, pricing, and packaging. You cannot investigate them all at once. Therefore, you must be selective and determine what problems you want to answer through research.
Second, determine the research design, whether you want to do exploratory, descriptive, or causality studies.
Third, determine the data collection method. In this section, you have to decide whether to use secondary data or primary data. If it is primary data, will you use surveys, observations, experiments, or consumer panels? Another task is to design data collection forms, questionnaires, and sampling.
Fourth, collect data. Data can be either qualitative or quantitative.
Data collection depends on the research method you use, whether it is primary or secondary research. For example, suppose you decide to use secondary data. In that case, you may have to collect some statistics or reports from government agencies, international agencies, research firms, competitors, or trade associations.
Fifth, analyze and interpret data. Your first task is usually to integrate data into a database. Also, you may need to clean it up, so it’s ready for analysis.
You can use several descriptive or inferential statistical methods to describe the data, depending on your needs. The statistical techniques commonly used for social research are regression analysis, t-test, cluster analysis, factor analysis, cross-tabulation, and conjoint analysis.
Sixth, preparing a research report. You draw conclusions from the results of the analysis and, perhaps, make recommendations. You may need to make a full report or just present your findings in a PowerPoint.
Tables and charts are two tools for summarizing data so that it is easy to read. Both help you explain your findings and support the arguments for your recommendations.
Marketing research methods
Marketing research methods fall into two categories based on its data sources:
- Primary research – you are the first to collect data. This is also known as field research.
- Secondary research – you are second hand collecting data. Also known as desk research because you are collecting data from external sources.
You are taking data from original sources, such as consumers. You can use various methods, such as surveys, observations, and focus groups, to collect data.
In a survey, you create a questionnaire containing several questions. You may do it yourself or hire a few people to help you. You then meet with respondents and ask questions in the questionnaire.
Questions may be closed questions for which you have provided alternative answers. Or, it is an open-ended question where you let the respondent answer according to their knowledge.
You can also do interviews without a questionnaire. You have some open-ended questions for you to ask respondents. Then, you record each answer. You can do this face-to-face, over the phone, or via online channels.
Then, you can also interview focus groups. In this case, you gather a few people, say, six to ten people. You then ask for their opinion on a particular topic. You listen to their views or record them.
Under observation, you observe people’s reactions, often without having to get into the conversation directly. If you’re researching shoppers, you’ll probably notice the first shelf they go to, the items they cart, and the items they end up buying at the checkout.
In this method, you rely on data from secondary sources. These sources can come from:
- Publications from government institutions such as central statistical agencies.
- Publications from international institutions such as the world bank and world trade center.
- Publications from research companies like Nielsen.
- Company or other stakeholder reports such as financial reports, annual reports, public presentations and press releases.
- General media such as newspapers and magazines, both print and online.
- Publications from business associations or trade journals.
Secondary research offers the convenience of collecting data, as well as being cheap. You can do it on the table without having to go out on the pitch.
However, unlike primary research, the accuracy of the data is a significant problem for secondary research. You depend on external parties for data quality. It can produce biased information and errors in making conclusions and decisions.