What is Market Research? [PDF Inside] Definition, Objectives, Types, Process, and Importance
Today consumers do research about your company before purchasing your product or services. Now they’re more likely to ask for referrals from persons who bought your product or services rather than talking to your representatives. Now they choose those products that have high ratings or good reviews.
With this in mind, you have to adopt the best marketing strategy according to understanding your customer’s psychology. You must have a deep understanding of your specific market, and what makes your customers buy your products and services.
Definition of Market Research:
The process of evaluating the feasibility of a new product or service through research conducted directly with possible customers is called market research.
Market research or marketing research is considered the process of determining the viability of a new service or product through research conducted with potential customers.
It lets a company explore the target market and get feedback from consumers about their interest in the product or service.
Marketing research can be conducted by the company itself or a third-party company that has a specialization in market research. The process of marketing research can be done by conducting surveys, interacting with customers, conducting interviews, product testing, and focus groups.
The purposes of market research are to understand the market related to a particular product or service, to see the audience’s reaction, and to satisfy customers’ specific needs with a proper product or service.
The data collected from conducting market research can be used to tailor advertising and other marketing activities.
Objectives or Benefits of Market Research:
Every human activity has a purpose. There are mainly 5 objectives of market research;
1. Know the Consumers:
Marketing is associated with people, products, and the process of transfer. Every business should know about all the consumers’ opinions who are willing to pay for the product or service of your firm. Useful information may emerge if the basic data such as frequency of buying, social category, number of buyers, etc. are made available. With the help of that information, you can get insights about areas of sales, sales rates, the behavior of consumers, retaining rate, etc. If such useful data are made available, the market potential is made known easily.
2. To Measure the Impact of Promotional Efforts:
In modern days companies implement different marketing strategies to promote their products or services. Some promotional strategies are appealing and some are the flop. In marketing research, market analysis gives the best understanding of the strengths and weaknesses of a strategy so that it can be suitably changed to get better results.
3. To Know Consumer Response:
Every consumer-oriented company is keener on knowing consumer response to its efforts of delivering the products. A study of consumer response is a part of marketing research and product testing.
In other words, the company is eager to know whether the customer is either satisfied or dissatisfied with the products or services they have generated. These clues are the way to product improvement in the future in terms of materials, packaging, color, size, design, quality, and so on. In this way, consumer response helps to improve the overall quality of the product to meet consumer needs.
4. To Master the External Forces:
Some external factors like Government Policies, spending patterns, competitors’ moves, the company’s market share, developments in foreign markets, technological changes, ecological variations, the purchasing power of consumers, and substitutes available will impact marketing plans and programs.
The impact of external factors should be regularly examined with the help of the data collected in marketing research because research makes firms adaptive as it gets innovative.
5. To Know Market Costs and Profits:
In recent times, marketing has escalated to such an extent that the optimization of profiles become a big problem. Marketing cost is basically an input that a company employed to execute its marketing program that is used as a standard measure of performance.
Research related to marketing cost helps to evaluate and indicate these marketing policies and procedures whose cost is not proportional to the results. Cost analysis also helps to analyze the profit that gives data on profit performance by regions, consumers, and products. These findings drive certain changes or adjustments in pricing, promotion, and distribution.
Types of Market Research
There are mainly two types of market research;
1. Primary Research:
Primary research is a process where a business interacts with its consumers or employs a third party to do relevant studies (qualitative or quantitative research) and collect data (numerical or non-numerical).
In the previous period, marketing research has been a daunting concept for brands because they don’t quite know where to start or how to deal with vast amounts of data. In the modern era, the evolution of technology has meant that brands have access to basic, and easy-to-use tools to solve the exact problem. As a result, businesses are more positive about their own projects and data, with the extra benefit of observing the insights that appear from this research in real time.
Primary research can be done in a range of different ways;
- Focus Groups: Focus group is basically a small group of people responding to the online surveys sent to them. These groups are consisting of 6-10 people and the best part about this research is the information can be collected remotely, which means it doesn’t require interacting with group members personally. This is a qualitative research method.
- One-to-One Interviews: This involves personal interaction in the form of an interview, where the researcher asks several questions to gather data from the respondent. The questions are basically open-ended. This practice heavily depends on the experience of the interviewer to ask questions that evoke responses.
- Ethnographic Research: This is an in-depth research method that is conducted in the natural settings of the respondents. This method required observing consumers from their homes. This is where they can be more comfortable and honest and researchers can directly observe people using products. It takes a lot of time and is a qualitative research method.
- Customer Surveys: Surveys in person, via smartphones, online forms, polls, and using survey software are hugely informative. It is a list of questions that gives you the best insight into how a consumer feels using the product or services you provide. This is basically a quantitative research method.
- Questionnaires: A questionnaire is a research process that comprises a set of questions that designs to gather information from a respondent. A marketing research questionnaire is typically a mix of close-ended and open-ended product or service-based questions. This marketing research process can be both qualitative and quantitative method.
2. Secondary Research:
Secondary market research uses data and insights that you do not collect by yourself. It includes data gathered from both qualitative and quantitative research. You can use this information to guide product positioning and decision-making.
There are many sources of secondary research data;
- Public Sources: Public sources are the most convenient way to gather a huge amount of free information. Government archive offers information free of cost to the researcher. A researcher can also document available information.
- Commercial Sources: Although commercial sources are reliable also it is quite expensive. Newspapers, magazines, television media, and journals are some great sources of commercial sources for gathering information for secondary research.
- Company Web Sites: Many companies publish their business data and information on their websites or give those data to a business website. You can access that information absolutely free and use that for your research.
- Other Sources: There are some other sources from where you can gather information for your research. They are;
- Published market studies
- Analyst reports
- Customer emails
- Customer surveys
- Recorded meetings and interviews
Qualitative Research: Qualitative research is generally the process of gathering non-numerical data by the researcher from interviews, questionnaires, focus groups, observation, case studies, etc.
Quantitative Research: Quantitative research is basically the process of analyzing numerical data collected from surveys, experiments, polls, analytics, and secondary sources.
Process of Market Research
Let’s find out how to do market research step by step.
1. Define The Problem:
The first step of the marketing research process is to find out a specific problem. A well-defined problem will help researchers when they ask questions. These questions should be directed toward finding the solution. Make sure the questions should be clear, relevant, and easy to understand. Researchers can conduct a test with a small group of people to know whether the questions are relevant and understandable.
Research objectives should be written precisely and should briefly describe the information that is needed and how it will get. They should also have the answer to the question, “Why are we doing this research?”
2. Define Buyer Personas:
Buyer Personas are the generalized presentations of ideal customers. They are profiles that maintain the special characteristics of the model client and report the possible recurring actions. But before you define buyer personas or define samples, you should know some criteria;
- An organization never wastes its resources by collecting information from the wrong population. So as a researcher, always choose an effective sample.
- Considering the size of the sample, the larger it is, the more likely it is to represent the population. A larger representative sample gives the researcher greater confidence that the people included are the ones they need, and they might reduce bias.
3. Prepare Questions and Conduct Research:
After defining samples, the next step is to prepare questions. Make sure that you organize the interview in a sequence that will establish a progressive depth of understanding, and that you manage your time so that you’re able to ask all of the important questions. Keep in mind that your questions should be relevant, clear, and easy to understand for the respondents.
After listing the questions, it is time to conduct surveys, interviews, and questionaries to collect data. The fact that incomplete answers or incorrect information will cause errors in research.
4. List Your Major Competitors:
After collecting data from primary (Interviews, surveys, questionaries, focus groups) and secondary research (Government archives, newspapers, magazines, books, websites) prepare a list consisting of all major competitors, their strengths, weaknesses, financial situations, Reputations, etc. It will give a clear picture of where your company stands.
5. Analyze Your Findings:
After executing all the above steps, an in-depth analysis will be effective in gaining solutions. The only quantitative data that will be collected is age, profession, sex, and the number of interviewees because the rest are experiences and emotions the interviewers have transmitted to us. Empathy mapping is a tool that enables us to put ourselves in the place of our customers in order to pinpoint the traits that will help us tailor our goods and services more effectively.
6. Develop a Research Report:
After your findings are analyzed, develop a research report where you can organize the results of the market research and share the acquired knowledge with the rest of the team, marketing managers, CMOs, and executives from other departments.
To make a good report, you should follow some steps;
- Start with your conclusions and give them fundamentals instead of accumulating evidence.
- Make your report so reliable that anyone can extract something from your report for their work.
- The order of your presentation should not influence by the order of the questions in your questionnaire.
- Restructure your data to discover new and valuable information.
7. Make Decisions:
Market research helps researchers to know a lot of information, for example, consumer purchase intentions, and feedback about target market growth. It can also help in determining the prices of their product or service and identifying a point of balance that will benefit them and the consumers. So, according to the market condition, take decisions and implement what you planned.
Why Does Every Business Need Market Research?
Marketing research is the most efficient way to get insight into consumer behavior, competitors, and overall market condition. The main goal of marketing research is to collect information that helps your business take essential decisions.
The 4 most crucial importance of marketing research are given below:
Market research helps a company to gain information about its competitor’s behavior. It will give you full insights into the strengths and weaknesses of your competitors and give an idea of what price point you will choose for your products and services.
By conducting marketing research, you can create profiles of your customers and build up an understanding of their buying habits and how much they’re willing to spend. Most importantly, you can learn what will make someone use your product or service over a good competitor.
Marketing research gives you insights into your consumer’s buying habits and spending patterns.
So, by conducting marketing research, you can collect information on complementary products and services. Consumer changes with new technologies and different conditions, and you may discover new requirements that are not being met, which can build new opportunities for your business.
Local and national economy influences every small and large business. Performing marketing research with consumers gives the business an overview of whether they are optimistic or scared about the direction of the economy. It also helps businesses to make adjustments according to economic conditions.
For example, a business can delay its product launch due to a negative economic environment.