Market Research: What is market research?
Neglected by many as they do not understand its importance and ignored by others due to lack of resources, market research is one of the foundation of doing business. More exactly, market research allows entities to gather information about markets interest for a product or a service.
More exactly, market research allows entrepreneurs and companies to understand the need for the products or services they will promote and then subsequently, create marketing plans for products and services that will have a huge impact on potential markets and raise awareness and interest.
Traditionally, market research is conducted through surveys and relevant industry data.
However, in recent years, market research has advanced and now entails innovative methodologies derived by the heavy use of technology, methodologies as:
• On-Line Communities, Webcam based Interviews, Apps based Research, Virtual Environments, Research Gamification,
• Mobile Surveys, Mobile Qualitative, Mobile Ethnography,
• Social Media Analytics, Text Analytics, Visualization Analytics,
• Eye Tracking, Facial Analysis, Neuro Marketing, Biometric Response,
• Big Data, Crowdsourcing, Predictive Markets, Behavioral Economics,
• Micro surveys.
For the time being, many experts agree that in the future, companies will use both traditional and advanced marketing concepts.
What did we learn until now?
We see that traditional market will be shortly replaced by digital marketing. But to really understand how you can take advantage of market research, let`s continue reading:
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More academic research on the topic:
1 The purpose of market research
1.1 The meaning and purpose of market research
1.1.1 Why do companies need accurate and up-to-date information? In order to carry out effective marketing, companies need information: information on customer wishes, market demand, competition, distribution channels, etc. This information must be updated periodically because companies operate in a dynamic environment, characterized by:
• Changes in technology: enabling new products and new production processes (for example, the growth of digital study products such as this toolkit that reduce the demand for printed textbooks) • Changes in consumer tastes: which means that the demand for some products will decrease, while others will make it grow more popular (for example, a greater demand for holidays related to the activity at the expense of mass market beach vacations)
• Changes in the product range of competitors: the introduction of new rival products or changes in pricing policies can greatly influence the demand for a product (for example, the introduction of Microsoft X-Box, which has challenged Sony's PlayStation 2)
• Changes in economic conditions: an improvement or worsening of the economic climate will have an impact on income at the national or regional level. Different products may be affected differently, eg. luxuries v needs, etc
1.1.2 What is the purpose of the market investigation? Market research can help a company to perform one or more of the following actions:
1. Get a more detailed understanding of consumer needs: market research can help companies discover consumer opinions on a variety of topics, for example, opinions on product prices, packaging, advertising campaigns recent
2. Reduce the risk of failure of the product / business: there is no guarantee that any new idea is a commercial success, but accurate and up-to-date information in the market can help a company to make informed decisions, which translates into products that Consumers want in sufficient quantity to achieve commercial success.
3. Future trends forecasts: market research can not only provide information about the current state of the market, but can also be used to anticipate the needs of customers. Companies can make the necessary adjustments in their product portfolios and production levels to continue being successful.
1.1.3 What kind of information might a company need?
• Who are our customers? Are they young / old? Female male; local / national / international; How much do they earn?
• How do customers make purchasing decisions in our market? What information do they need? How long does it take to decide? Do you compare the products with alternative competing products first?
• How well are our products selling? Are the sales improving / declining / stable? Is the market growing / declining / stable? Are we increasing our market share?
• Have competitors recently introduced new products? Are they cheaper, what new features do they have, how are they promoted, sold?
• How can we respond successfully to changes in the market? Do we introduce new products or modify old ones? Should we launch existing products in new markets? Are these changes in line with our corporate objectives?
1.1.4 How much information does a company need? Marketers often complain that they lack sufficient marketing information or, alternatively, the right kind of information. However, although market information is necessary for decision making, it is important to understand that, in practice:
• Most marketing decisions are based on incomplete information. Why? Why:
• All possible information is not available.
• It is not worth collecting information beyond a certain point (it takes too much time and / or cost)
1.1.5 How do companies obtain the information they need? The information that marketing managers need comes from three main sources:
Internal information of the company, for example, Sales, orders, customer profiles, stocks, customer service reports.
Marketing intelligence: this is a general term to include all the daily information about developments in the market that helps a company prepare and adjust its marketing plans. It can be obtained from many sources, including suppliers, customers and distributors. It is also possible to buy intelligence information from external providers (eg, Mintel, Dun and Bradstreet) that will produce business intelligence reports that can be sold profitably to any interested organization.
Market research: existing data from internal sources may not provide enough detail. Similarly, you can not always rely on published reports from market intelligence organizations to provide the updated and relevant information required. In these circumstances, it is possible that a company must commission specific studies to acquire the necessary data to support its marketing strategy.
1.1.6 What is market research? Market research can be defined as follows:
The systematic collection, recording and analysis of data on problems related to the commercialization of goods and services.
• Systematic: using a clear and organized method or system. • Compilation: know what you are looking for and collect the appropriate information.
• Recording: keep clear and organized records of what you are trying to discover.
• Analyze: order and make sense of your information to extract relevant trends and conclusions
• Problems related to marketing: find the answers to the questions that help the business to better understand its customers and other details about the market.
1.1.7 What is the difference between market research and market research?
• Market research is the process of identifying primary and secondary information about the demand for a product.
• Market research is a broader process that involves market research, product testing, pricing, consumer reactions to the promotion and an evaluation of the competition.
1.1.8 How is market research carried out?
1. Define the problem and the objectives of the research: it is important that the problem or the questions under investigation are clearly defined. Too broad a definition will result in a large amount of unnecessary information: a too narrow definition may mean that more research will be necessary. The research objectives must be SMART (that is, specific, measurable, achievable, relevant and time specific). This will reduce the risk of confusion or misunderstandings during the investigation and will facilitate the evaluation of the results of the investigation. 2.Develop the research plan: the next step is to decide the most effective way to obtain the necessary information. This will involve a series of activities, including:
• Choose which data sources will be used? - Primary, secondary or both?
• If it is necessary to collect primary data, decide which is the most appropriate approach for the investigation, for example. a series of focus groups or a large-scale survey.
• Choose the type of research instruments that will be used: questionnaires are commonly used in surveys, but several mechanical devices can also be used, for example. Galvanometers are used to measure emotions or interest created in response to a specific announcement, and audiometers sometimes connect to televisions to record when they are on and which channels are tuned.
• Build a sampling plan, that is, who will be surveyed (the sampling frame), how many people should be surveyed (the size of the sample), how to choose (the sampling procedure)
• Decide how respondents will be contacted, by mail, telephone or in person.
• Establishment of the budget and deadlines for the completion of the investigation.
Collect the information: this is probably the most expensive stage of the investigation and the most prone to error.
Improvements in telecommunications and the increasing use of computers have helped reduce the number of errors and have facilitated the recording and storage of information. However, researchers must still be aware of the problems caused by interviewers and skeptical or dishonest respondents, and also how to deal with elected respondents who can not be contacted or refuse to participate.
1. Analyze information: this involves converting the mass of data collected into meaningful information on which decisions can be made. The data will be collected and statistical techniques will be applied, for example, to identify the "most common" or "average" answer, or the range of views.
2. Present the findings: the exact format of the presentation and the level of detail required should be agreed in advance, since both will depend on the needs and wishes of those responsible for the research.
1.2 Uses of market research
1.2.1 What kind of information can be obtained through market research? Marketing decisions are made under conditions of uncertainty and risk. For example:
• Will a new product be sold as expected?
• What will happen to the customers' demand if the prices of the products are increased or reduced?
• How much (if any) should be invested in a marketing campaign? • What are the chances that an advertising campaign will reach the intended audience and how will they respond if they do so? Market research aims to reduce uncertainty and risk by providing information on the variables involved in the decision and the possible outcomes of marketing decisions and actions. A wide variety of information used to support marketing decisions can be obtained from market research:
Information about the market:
• Analysis of the market potential for existing products, p. Eg Size of the market, growth, changes in sales trends.
• Forecast of future demand for existing products.
• Evaluate the potential of new products.
• Study of market trends.
• Analysis of the behavior and performance of the competition.
• Analysis of market shares.
Product information:
• Likely acceptance / rejection of new products by the client.
• Comparison of existing products in the market, for example, price, characteristics, costs, distribution
• Forecast of new uses for existing products.
• Technologies that can threaten existing products.
• Development of new product
Information on the promotion in the market:
• Effectiveness of advertising.
• Effectiveness of the sales force (personal sale).
• Scope and effectiveness of sales promotion activities.
• Competitor promotion strategies.
Information on the distribution in the market:
• Use and effectiveness of distribution channels.
• Direct sales opportunities.
• Costs of transportation and storage of products.
• Level and quality of the after-sales service.
Information on prices in the market:
• What happens to demand after changes in price (a concept known as "elasticity" of demand)
• Analysis of the impact of changes in prices on income, costs and profits.
• The customer's perceptions of prices.
1.3 Quantitative and qualitative research
One way of looking at market research is to consider the nature of the information that has been obtained. In this context, the main distinction that is made is between quantitative research and qualitative research. Note: both quantitative and qualitative research can be done using primary and / or secondary sources.
1.3.1 What is quantitative research?
Quantitative research gathers statistically valid, numerically measurable data.
Typical quantitative research will be related to market size, market share and market growth. At the heart of all quantitative research is the statistical sample.
This is usually collected by survey. Quantitative research deals with finding concrete and "hard" data.
It is said that the collected data are statistically valid. This type of research focuses on measuring aspects of a market and expressing these characteristics in numerical terms.
Quantitative information is usually obtained through surveys that use large samples.
Great care must be taken when selecting the sample and also in the design of the sample questionnaire and the quality of the analysis of the collected data.
Typical examples of quantitative information could include:
• The percentage of married women in the UK who work full time
• The number of families in the northwest that live in rental housing.
• The percentage of the population of the United Kingdom that is over 60 years old.
Quantitative research answers questions such as:
•How many?
•How much?
•That percentage?
•How often?
1.3.2 What is qualitative research?
Qualitative research deals with finding "soft" information, such as opinions, attitudes, beliefs and motivations of people. The main objective of quantitative research is to understand the behavior and perceptions of consumers.
Typical examples of qualitative information could include:
• The reasons why a customer can choose one brand of detergent instead of another.
• Customer opinions regarding a variety of potential logo designs in the packaging of a new product In general, qualitative information is collected using techniques that are designed to encourage a more detailed response from the interviewee. Such techniques include in-depth interviews and focus groups taken from relatively small samples. These techniques allow the researcher to explore a topic in greater depth and gain a better understanding of the personality and personal circumstances of the respondent.