The study of consumers' needs and preferences, and of the acceptability of goods and services offered for sale; in economics, the study of the requirements of markets. Survey techniques are often used, seeking the opinions of individuals who might be buyers, as well as the expectation of sales staff or competing products, and providing information about the potential size and characteristics of a particular market segment. Market research also enables advertizing agencies to target their campaigns more accurately. Although market research achieved recognition as a science in the 1920s and 1930s, it was pioneered on a large scale in the USA and Japan after World War 2.
Market research is the process of systematic gathering, recording and analyzing of data about customers, competitors and the market. Market research can help create a business plan, launch a new product or service, fine tune existing products and services, expand into new markets etc. It can be found out what market characteristics your target market has. With market research, companies can learn more about current and potential customers.
The purpose of market research is to help companies make better business decisions about the development and marketing of new products. Market research represents the voice of the consumer in a company.
A list of questions that can be answered through market research:
What is happening in the market?A simple example of what market research can do for a business is the following. However, market research demonstrated that consumers supported the alternative concept. [Burns 2001]
With market research you can get some kind of confirmation that there is a market for your idea, and that a successful launch and growth are possible.
Market research for business planning
Market research is discovering what people want, need, or believe. Once that research is complete it can be used to determine how to market your specific product. For example you could carry out market research early on and not wait until you are almost ready to enter the market. If early market research reveals that your business idea has real potential, you can use this information in planning the build-up of your business. [Ilar 1998]
For starting up a business there are a few things should be found out through market research in order to know if your business is feasible. These are things like:
Market informationMarket information is making known the prices of the different commodities in the market, the supply and the demand. The most basic form of market information is the best quotation and last sale data, including the number of shares, with respect to a particular security at a given time. [Market research 2006]
Examples of market information questions are:
Who are the customers? Market segmentationMarket segmentation is the division of the market or population into subgroups with similar motivations.
The market size is more difficult to estimate if you are starting with something completely new. [Ilar 1998]
But besides information about the target market you also need information about your competitor, your customers, products etc. A few techniques are:
Customer analysis Competitor analysis Risk analysis Product research Advertising researchIn the last chapter you can read how to perform market research, with interviews and questionnaires, but there is already a lot of information available. Market research firms and industry experts publish much of their information on websites, and in trade and business magazines.
Perform market research
This chapter introduces the steps involved in the market research process. It also provides you with a brief preview of each of the steps necessary to conduct a market research effort. As you can see in figure 1, the market research process has 4 basic steps. These steps include:
Defining the research problem Establishing the research design Collecting and analysing data Formulate findingsFigure 1 is the meta-process model of market research. First although the list does strongly imply an orderly step-by-step process, it is rare that a research project follows these steps in the exact order that they are presented in the figure. Market research is more of an interactive process whereby a researcher, by discovering something in a given step, may move backward in the process and begin again at another step [Market research 2006] Finding some new information while collecting data, may cause the researcher to establish different research objectives. In the following the different market research steps are described.
Defining the research problem
The step defining the research problem exists of 2 main steps: (1) formulating the problem and (2) establishing research objectives.
Defining the problem is the single most important step in the market research process. A clear statement of the problem is a key to a good research. A firm may spend hundreds or thousands of dollars doing market research, but if it has not correctly identified the problem, those dollars are wasted. After formulating your problem, you need to formulate your research questions.
With the problem or opportunity defined, the next step is to set objectives for your market research operations. Research objectives, related to and determined by the problem formulation, are set so that when achieved they provide the necessary information to solve the problem. A good way of setting research objectives is to ask, “What information is needed in order to solve the problem?" To avoid this trap engineering team of this company turned to market research to evaluate how changes in performance and fuel economy would affect sales volume and customer satisfaction. [Burns 2001]
The problem description, the research question, sub questions and the research objectives are part of an overall document problem description.
After describing and formulating the problem and the objectives, the next step is to prepare a detailed and realistic time frame to complete all steps of the market research process. For example, a holiday greeting card business may want to conduct research before or around the holiday season buying period, when their customers are most likely to be thinking about their purchases. [Market research 2006]
Selecting and establishing research design
The step selecting and establishing research design consists of 3 main steps: (1) select the research design, (2) identify information types and sources and (3) determine and design research instrument.
Select the research design
As stated earlier, every research project and every business is different. Still, there are enough commonalities among research projects to categorize them by research methods and procedures used to collect and analyze data. There are three types of research design:
Exploratory research design Descriptive research Causal researchExploratory research is defined as collecting information in an unstructured and informal way.
Descriptive research refers to a set of methods and procedures that describe marketing variables. These types of research studies may describe such things as consumers’ attitudes, intentions, and behaviours, or the number of competitors and their strategies.
Causal research design is conducted by controlling various factors to determine which factor is causing the problem. Although causal research can give you a high level of understanding of the variable you are studying, the designs often require experiments that are complex and expensive.
Identify information types and sources
There are two types of information available to a market researcher: primary data and secondary data. Both types of research have a number of activities and methods of conducting associated with them. Secondary research is usually faster and less expensive to obtain than primary research. Gathering secondary research may be as simple as making a trip to a local library or business information center or browsing the Internet. There is already a lot of statistics about different businesses that can be used for this research.
Information source
Secondary data help identify the problem; fomulate an appropriate research design; answer certain research questions and test some research hyotheses;
Determining and design research instrument
After determining which type(s) of information are needed, the methods of accessing data must be determined.
The actual design of the research instrument, the data collection form that is used to ask and record the information is critical to the success of the project. The most common research instrument is the questionnaire.
Collecting and analyzing data
Data collection is usually done by trained interviewers who are employed by field data collection companies to collect primary data.
Data analysis is needed to give the raw data any meaning. This is the process of checking the raw data to verify that the data has been correctly entered into the files from the data collection form.
Data can also be collected on a smaller scale to obtain more qualitative data.
Formulate findings
After analyzing the data you can make your findings based on this data.
User Comments Add a comment…