What Is Market Research?
Market research is a systematic process followed to make informed decisions regarding a business to reduce risks in marketing decisions. It is used to judge the viability of a product or a service by studying the prospective consumers or the target market who can be found by means of a sales lead. Market research is one of the essential tasks of all organisations, and its main aim is market analysis. Such research is helpful before a business makes decisions like launching a new product or service or introducing an additional feature because the company can gauge what to expect, what to improve, what to change etc. Assessing the receptivity of the consumers is useful for product differentiation. Market research may be done by in house teams or may be outsourced to specialised agencies. Market research is essential to give companies a sustainable competitive advantage over the others in the sector.
- Market research is a systematic process followed to make informed decisions regarding a business to reduce risks in marketing decisions.
- The total market research process comprises various steps from defining the research problem until reporting the findings of the research conducted.
- Business decisions is made in the backdrop of robust market research to ensure that the business investments are more productive and thus can help companies grow and mitigate possible financial risks.
Frequently Asked Questions (FAQs)
What is market research and how does it work?
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The steps in the process of market research are as given below:
- Defining Research Problem
Market research is conducted to find a solution to a problem or the answer to a question. The first step, therefore, is to confirm the question/ problem which we intend to probe through the research. It is like setting the goal or the intro for which the study is being conducted.
- Deciding a Research Design
This step decides the research method- Will it be exploratory or descriptive, or causal research; decisions regarding the sample must be made to ensure representativeness; the instrument of research may be primary data or secondary data depending on the nature of the study. The medium of research conduction- offline/online/telephonic is also decided at this stage. The primary goal of creating a research design is to describe how the research challenge will be addressed. Thus the rationale for choosing the design must be very clear and measurable as far as possible.
- Preparing Research Instrument
Data collection instruments like questionnaires, surveys, interview questions may be prepared, and even a pilot study must be conducted to check the appropriateness of the tool and selected question for arriving at results.
- Data Collection
Data is collected from primary or secondary sources as decided in the research design from the selected sample space. Every piece of data must be stored and used for analysis. The data collection process in the earlier times was face to face, but gradually, there was a shift to telephonic medium, and today it is majorly done online.
- Data Analysis
The collected data must be refined and prepared in the format required for analysis. It should be transformed into a format that is compatible with the software that will be used to analyse the data. After this, appropriate qualitative or quantitative methods and tests may be employed to analyse the collected data and find results. The dynamism of the markets has led to the field of Data Analytics becoming a much sought after skill in the domain of research.
The results must then be linked to the research objectives, and the implications of the findings can be reported to make informed decisions.
What Is The Importance Of Efficient Market Research?
Through market research, companies can get accurate and valuable information. Such information can help them in decisions like determining the market size, choosing an appropriate sales system, understanding customer preferences, gauging customer perceptions about the brand and analysing the customer responses. When management decision is made in the backdrop of such information, the business investments are more productive and can help companies grow and mitigate possible financial risks.
What Are The Possible Areas For Market Research?
- Analysis for market potential
- Demand estimation
- Analysis of Market Structure
- Product Information
- Pricing Decision
- Choice of Promotional method
- Location analysis
- Trend Analysis
- Analysis of Market Segments and opportunities
- Consumer Needs and Satisfaction
Where Market Research Paved The Way To Success?
The "My Starbucks Idea" platform was rolled out by Starbucks in 2008 for its market research. It was a space for customers- current and potential and employees to share their ideas or opinions regarding expectation about new products, re-launch of earlier products, observations on flavours or services or ambience. Such measures have helped Starbucks to grow to such levels today. The launch of their dairy-free milk alternatives was one such decision backed by solid market research.
“Apple Customer Pulse” was also a well-known and highly effective market research conducted by Apple to survey select customers periodically.
Tune in Hook Up was a slogan associated to a video dating site, but the idea did not pick up well. Later the founders, by means of market research, realized that finding proper videos was challenging, and the solution found was YouTube which was later bought by Google.
The “Netflix Downloads for You” option too was based on market research and is aimed at situations where the internet may be cut off, like in case of air or underground rail travels or places with weak bandwidth and poor internet penetration in lesser developed areas.
MacDonald's market research to enter the Indian market was the reason behind the localised flavours and menu offered for the vegetarian and Indian taste loving citizens. Reasonably priced ice creams were the means to convert people to customers, who otherwise could not afford to eat there.