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Market Research Basics: What is Market Research?

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Doing market research is like a cross between a scavenger hunt and a jigsaw puzzle.

There's no one magic information source that has all the answers. And sometimes, the information or data you're looking for may not even exist. Don't get discouraged! There are often alternate places to look or ways to search.

What is a market research definition?

Market research is " The process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business's target market, the industry as a whole, and the particular competitors you face " ( source ).

Essentially, it helps you answer some of the following questions:

• What is the size of my market?
• Who are my competitors?
• Which market is best suited for my product or service?
• How much will customers pay for my product or service?
• What are the emerging trends in an industry?

These questions can be roughly divided into two categories, Industry Questions, and Market Sizing & Customer Discovery.

The best market research is a combination of primary and secondary information.

Primary information: research you compile yourself or hire someone to gather for you.

Secondary information : This type of research is already compiled and organized for you. Examples of secondary information include reports and studies by government agencies, trade associations or other businesses within your industry.( source )

This module focuses on secondary research.

The next section defines the information sources you will likely use in researching your market.

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How to Do Market Research: The Complete Guide

Learn how to do market research with this step-by-step guide, complete with templates, tools and real-world examples.

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What are your customers’ needs? How does your product compare to the competition? What are the emerging trends and opportunities in your industry? If these questions keep you up at night, it’s time to conduct market research.

Market research plays a pivotal role in your ability to stay competitive and relevant, helping you anticipate shifts in consumer behavior and industry dynamics. It involves gathering these insights using a wide range of techniques, from surveys and interviews to data analysis and observational studies.

In this guide, we’ll explore why market research is crucial, the various types of market research, the methods used in data collection, and how to effectively conduct market research to drive informed decision-making and success.

What is market research?

Market research is the systematic process of gathering, analyzing and interpreting information about a specific market or industry. The purpose of market research is to offer valuable insight into the preferences and behaviors of your target audience, and anticipate shifts in market trends and the competitive landscape. This information helps you make data-driven decisions, develop effective strategies for your business, and maximize your chances of long-term growth.

Why is market research important? 

By understanding the significance of market research, you can make sure you’re asking the right questions and using the process to your advantage. Some of the benefits of market research include:

• Informed decision-making: Market research provides you with the data and insights you need to make smart decisions for your business. It helps you identify opportunities, assess risks and tailor your strategies to meet the demands of the market. Without market research, decisions are often based on assumptions or guesswork, leading to costly mistakes.
• Customer-centric approach: A cornerstone of market research involves developing a deep understanding of customer needs and preferences. This gives you valuable insights into your target audience, helping you develop products, services and marketing campaigns that resonate with your customers.
• Competitive advantage: By conducting market research, you’ll gain a competitive edge. You’ll be able to identify gaps in the market, analyze competitor strengths and weaknesses, and position your business strategically. This enables you to create unique value propositions, differentiate yourself from competitors, and seize opportunities that others may overlook.
• Risk mitigation: Market research helps you anticipate market shifts and potential challenges. By identifying threats early, you can proactively adjust their strategies to mitigate risks and respond effectively to changing circumstances. This proactive approach is particularly valuable in volatile industries.
• Resource optimization: Conducting market research allows organizations to allocate their time, money and resources more efficiently. It ensures that investments are made in areas with the highest potential return on investment, reducing wasted resources and improving overall business performance.
• Adaptation to market trends: Markets evolve rapidly, driven by technological advancements, cultural shifts and changing consumer attitudes. Market research ensures that you stay ahead of these trends and adapt your offerings accordingly so you can avoid becoming obsolete. 

As you can see, market research empowers businesses to make data-driven decisions, cater to customer needs, outperform competitors, mitigate risks, optimize resources and stay agile in a dynamic marketplace. These benefits make it a huge industry; the global market research services market is expected to grow from $76.37 billion in 2021 to $108.57 billion in 2026 . Now, let’s dig into the different types of market research that can help you achieve these benefits.

Types of market research 

• Qualitative research
• Quantitative research
• Exploratory research
• Descriptive research
• Causal research
• Cross-sectional research
• Longitudinal research

Despite its advantages, 23% of organizations don’t have a clear market research strategy. Part of developing a strategy involves choosing the right type of market research for your business goals. The most commonly used approaches include:

1. Qualitative research

Qualitative research focuses on understanding the underlying motivations, attitudes and perceptions of individuals or groups. It is typically conducted through techniques like in-depth interviews, focus groups and content analysis — methods we’ll discuss further in the sections below. Qualitative research provides rich, nuanced insights that can inform product development, marketing strategies and brand positioning.

2. Quantitative research

Quantitative research, in contrast to qualitative research, involves the collection and analysis of numerical data, often through surveys, experiments and structured questionnaires. This approach allows for statistical analysis and the measurement of trends, making it suitable for large-scale market studies and hypothesis testing. While it’s worthwhile using a mix of qualitative and quantitative research, most businesses prioritize the latter because it is scientific, measurable and easily replicated across different experiments.

3. Exploratory research

Whether you’re conducting qualitative or quantitative research or a mix of both, exploratory research is often the first step. Its primary goal is to help you understand a market or problem so you can gain insights and identify potential issues or opportunities. This type of market research is less structured and is typically conducted through open-ended interviews, focus groups or secondary data analysis. Exploratory research is valuable when entering new markets or exploring new product ideas.

4. Descriptive research

As its name implies, descriptive research seeks to describe a market, population or phenomenon in detail. It involves collecting and summarizing data to answer questions about audience demographics and behaviors, market size, and current trends. Surveys, observational studies and content analysis are common methods used in descriptive research. 

5. Causal research

Causal research aims to establish cause-and-effect relationships between variables. It investigates whether changes in one variable result in changes in another. Experimental designs, A/B testing and regression analysis are common causal research methods. This sheds light on how specific marketing strategies or product changes impact consumer behavior.

6. Cross-sectional research

Cross-sectional market research involves collecting data from a sample of the population at a single point in time. It is used to analyze differences, relationships or trends among various groups within a population. Cross-sectional studies are helpful for market segmentation, identifying target audiences and assessing market trends at a specific moment.

7. Longitudinal research

Longitudinal research, in contrast to cross-sectional research, collects data from the same subjects over an extended period. This allows for the analysis of trends, changes and developments over time. Longitudinal studies are useful for tracking long-term developments in consumer preferences, brand loyalty and market dynamics.

Each type of market research has its strengths and weaknesses, and the method you choose depends on your specific research goals and the depth of understanding you’re aiming to achieve. In the following sections, we’ll delve into primary and secondary research approaches and specific research methods.

Primary vs. secondary market research

Market research of all types can be broadly categorized into two main approaches: primary research and secondary research. By understanding the differences between these approaches, you can better determine the most appropriate research method for your specific goals.

Primary market research 

Primary research involves the collection of original data straight from the source. Typically, this involves communicating directly with your target audience — through surveys, interviews, focus groups and more — to gather information. Here are some key attributes of primary market research:

• Customized data: Primary research provides data that is tailored to your research needs. You design a custom research study and gather information specific to your goals.
• Up-to-date insights: Because primary research involves communicating with customers, the data you collect reflects the most current market conditions and consumer behaviors.
• Time-consuming and resource-intensive: Despite its advantages, primary research can be labor-intensive and costly, especially when dealing with large sample sizes or complex study designs. Whether you hire a market research consultant, agency or use an in-house team, primary research studies consume a large amount of resources and time.

Secondary market research 

Secondary research, on the other hand, involves analyzing data that has already been compiled by third-party sources, such as online research tools, databases, news sites, industry reports and academic studies.

Here are the main characteristics of secondary market research:

• Cost-effective: Secondary research is generally more cost-effective than primary research since it doesn’t require building a research plan from scratch. You and your team can look at databases, websites and publications on an ongoing basis, without needing to design a custom experiment or hire a consultant. 
• Leverages multiple sources: Data tools and software extract data from multiple places across the web, and then consolidate that information within a single platform. This means you’ll get a greater amount of data and a wider scope from secondary research.
• Quick to access: You can access a wide range of information rapidly — often in seconds — if you’re using online research tools and databases. Because of this, you can act on insights sooner, rather than taking the time to develop an experiment. 

So, when should you use primary vs. secondary research? In practice, many market research projects incorporate both primary and secondary research to take advantage of the strengths of each approach.

One rule of thumb is to focus on secondary research to obtain background information, market trends or industry benchmarks. It is especially valuable for conducting preliminary research, competitor analysis, or when time and budget constraints are tight. Then, if you still have knowledge gaps or need to answer specific questions unique to your business model, use primary research to create a custom experiment. 

Market research methods

• Surveys and questionnaires
• Focus groups
• Observational research
• Online research tools
• Experiments
• Content analysis
• Ethnographic research

How do primary and secondary research approaches translate into specific research methods? Let’s take a look at the different ways you can gather data: 

1. Surveys and questionnaires

Surveys and questionnaires are popular methods for collecting structured data from a large number of respondents. They involve a set of predetermined questions that participants answer. Surveys can be conducted through various channels, including online tools, telephone interviews and in-person or online questionnaires. They are useful for gathering quantitative data and assessing customer demographics, opinions, preferences and needs. On average, customer surveys have a 33% response rate , so keep that in mind as you consider your sample size.

2. Interviews

Interviews are in-depth conversations with individuals or groups to gather qualitative insights. They can be structured (with predefined questions) or unstructured (with open-ended discussions). Interviews are valuable for exploring complex topics, uncovering motivations and obtaining detailed feedback. 

3. Focus groups

The most common primary research methods are in-depth webcam interviews and focus groups. Focus groups are a small gathering of participants who discuss a specific topic or product under the guidance of a moderator. These discussions are valuable for primary market research because they reveal insights into consumer attitudes, perceptions and emotions. Focus groups are especially useful for idea generation, concept testing and understanding group dynamics within your target audience.

4. Observational research

Observational research involves observing and recording participant behavior in a natural setting. This method is particularly valuable when studying consumer behavior in physical spaces, such as retail stores or public places. In some types of observational research, participants are aware you’re watching them; in other cases, you discreetly watch consumers without their knowledge, as they use your product. Either way, observational research provides firsthand insights into how people interact with products or environments.

5. Online research tools

You and your team can do your own secondary market research using online tools. These tools include data prospecting platforms and databases, as well as online surveys, social media listening, web analytics and sentiment analysis platforms. They help you gather data from online sources, monitor industry trends, track competitors, understand consumer preferences and keep tabs on online behavior. We’ll talk more about choosing the right market research tools in the sections that follow.

6. Experiments

Market research experiments are controlled tests of variables to determine causal relationships. While experiments are often associated with scientific research, they are also used in market research to assess the impact of specific marketing strategies, product features, or pricing and packaging changes.

7. Content analysis

Content analysis involves the systematic examination of textual, visual or audio content to identify patterns, themes and trends. It’s commonly applied to customer reviews, social media posts and other forms of online content to analyze consumer opinions and sentiments.

8. Ethnographic research

Ethnographic research immerses researchers into the daily lives of consumers to understand their behavior and culture. This method is particularly valuable when studying niche markets or exploring the cultural context of consumer choices.

How to do market research

• Set clear objectives
• Identify your target audience
• Choose your research methods
• Use the right market research tools
• Collect data
• Analyze data 
• Interpret your findings
• Identify opportunities and challenges
• Make informed business decisions
• Monitor and adapt

Now that you have gained insights into the various market research methods at your disposal, let’s delve into the practical aspects of how to conduct market research effectively. Here’s a quick step-by-step overview, from defining objectives to monitoring market shifts.

1. Set clear objectives

When you set clear and specific goals, you’re essentially creating a compass to guide your research questions and methodology. Start by precisely defining what you want to achieve. Are you launching a new product and want to understand its viability in the market? Are you evaluating customer satisfaction with a product redesign? 

Start by creating SMART goals — objectives that are specific, measurable, achievable, relevant and time-bound. Not only will this clarify your research focus from the outset, but it will also help you track progress and benchmark your success throughout the process. 

You should also consult with key stakeholders and team members to ensure alignment on your research objectives before diving into data collecting. This will help you gain diverse perspectives and insights that will shape your research approach.

2. Identify your target audience

Next, you’ll need to pinpoint your target audience to determine who should be included in your research. Begin by creating detailed buyer personas or stakeholder profiles. Consider demographic factors like age, gender, income and location, but also delve into psychographics, such as interests, values and pain points.

The more specific your target audience, the more accurate and actionable your research will be. Additionally, segment your audience if your research objectives involve studying different groups, such as current customers and potential leads.

If you already have existing customers, you can also hold conversations with them to better understand your target market. From there, you can refine your buyer personas and tailor your research methods accordingly.

3. Choose your research methods

Selecting the right research methods is crucial for gathering high-quality data. Start by considering the nature of your research objectives. If you’re exploring consumer preferences, surveys and interviews can provide valuable insights. For in-depth understanding, focus groups or observational research might be suitable. Consider using a mix of quantitative and qualitative methods to gain a well-rounded perspective. 

You’ll also need to consider your budget. Think about what you can realistically achieve using the time and resources available to you. If you have a fairly generous budget, you may want to try a mix of primary and secondary research approaches. If you’re doing market research for a startup , on the other hand, chances are your budget is somewhat limited. If that’s the case, try addressing your goals with secondary research tools before investing time and effort in a primary research study. 

4. Use the right market research tools

Whether you’re conducting primary or secondary research, you’ll need to choose the right tools. These can help you do anything from sending surveys to customers to monitoring trends and analyzing data. Here are some examples of popular market research tools:

• Market research software: Crunchbase is a platform that provides best-in-class company data, making it valuable for market research on growing companies and industries. You can use Crunchbase to access trusted, first-party funding data, revenue data, news and firmographics, enabling you to monitor industry trends and understand customer needs.

• Survey and questionnaire tools: SurveyMonkey is a widely used online survey platform that allows you to create, distribute and analyze surveys. Google Forms is a free tool that lets you create surveys and collect responses through Google Drive.
• Data analysis software: Microsoft Excel and Google Sheets are useful for conducting statistical analyses. SPSS is a powerful statistical analysis software used for data processing, analysis and reporting.
• Social listening tools: Brandwatch is a social listening and analytics platform that helps you monitor social media conversations, track sentiment and analyze trends. Mention is a media monitoring tool that allows you to track mentions of your brand, competitors and keywords across various online sources.
• Data visualization platforms: Tableau is a data visualization tool that helps you create interactive and shareable dashboards and reports. Power BI by Microsoft is a business analytics tool for creating interactive visualizations and reports.

5. Collect data

There’s an infinite amount of data you could be collecting using these tools, so you’ll need to be intentional about going after the data that aligns with your research goals. Implement your chosen research methods, whether it’s distributing surveys, conducting interviews or pulling from secondary research platforms. Pay close attention to data quality and accuracy, and stick to a standardized process to streamline data capture and reduce errors. 

6. Analyze data

Once data is collected, you’ll need to analyze it systematically. Use statistical software or analysis tools to identify patterns, trends and correlations. For qualitative data, employ thematic analysis to extract common themes and insights. Visualize your findings with charts, graphs and tables to make complex data more understandable.

If you’re not proficient in data analysis, consider outsourcing or collaborating with a data analyst who can assist in processing and interpreting your data accurately.

7. Interpret your findings

Interpreting your market research findings involves understanding what the data means in the context of your objectives. Are there significant trends that uncover the answers to your initial research questions? Consider the implications of your findings on your business strategy. It’s essential to move beyond raw data and extract actionable insights that inform decision-making.

Hold a cross-functional meeting or workshop with relevant team members to collectively interpret the findings. Different perspectives can lead to more comprehensive insights and innovative solutions.

8. Identify opportunities and challenges

Use your research findings to identify potential growth opportunities and challenges within your market. What segments of your audience are underserved or overlooked? Are there emerging trends you can capitalize on? Conversely, what obstacles or competitors could hinder your progress?

Lay out this information in a clear and organized way by conducting a SWOT analysis, which stands for strengths, weaknesses, opportunities and threats. Jot down notes for each of these areas to provide a structured overview of gaps and hurdles in the market.

9. Make informed business decisions

Market research is only valuable if it leads to informed decisions for your company. Based on your insights, devise actionable strategies and initiatives that align with your research objectives. Whether it’s refining your product, targeting new customer segments or adjusting pricing, ensure your decisions are rooted in the data.

At this point, it’s also crucial to keep your team aligned and accountable. Create an action plan that outlines specific steps, responsibilities and timelines for implementing the recommendations derived from your research. 

10. Monitor and adapt

Market research isn’t a one-time activity; it’s an ongoing process. Continuously monitor market conditions, customer behaviors and industry trends. Set up mechanisms to collect real-time data and feedback. As you gather new information, be prepared to adapt your strategies and tactics accordingly. Regularly revisiting your research ensures your business remains agile and reflects changing market dynamics and consumer preferences.

Online market research sources

As you go through the steps above, you’ll want to turn to trusted, reputable sources to gather your data. Here’s a list to get you started:

• Crunchbase: As mentioned above, Crunchbase is an online platform with an extensive dataset, allowing you to access in-depth insights on market trends, consumer behavior and competitive analysis. You can also customize your search options to tailor your research to specific industries, geographic regions or customer personas.

• Academic databases: Academic databases, such as ProQuest and JSTOR , are treasure troves of scholarly research papers, studies and academic journals. They offer in-depth analyses of various subjects, including market trends, consumer preferences and industry-specific insights. Researchers can access a wealth of peer-reviewed publications to gain a deeper understanding of their research topics.
• Government and NGO databases: Government agencies, nongovernmental organizations and other institutions frequently maintain databases containing valuable economic, demographic and industry-related data. These sources offer credible statistics and reports on a wide range of topics, making them essential for market researchers. Examples include the U.S. Census Bureau , the Bureau of Labor Statistics and the Pew Research Center .
• Industry reports: Industry reports and market studies are comprehensive documents prepared by research firms, industry associations and consulting companies. They provide in-depth insights into specific markets, including market size, trends, competitive analysis and consumer behavior. You can find this information by looking at relevant industry association databases; examples include the American Marketing Association and the National Retail Federation .
• Social media and online communities: Social media platforms like LinkedIn or Twitter (X) , forums such as Reddit and Quora , and review platforms such as G2 can provide real-time insights into consumer sentiment, opinions and trends. 

Market research examples

At this point, you have market research tools and data sources — but how do you act on the data you gather? Let’s go over some real-world examples that illustrate the practical application of market research across various industries. These examples showcase how market research can lead to smart decision-making and successful business decisions.

Example 1: Apple’s iPhone launch

Apple ’s iconic iPhone launch in 2007 serves as a prime example of market research driving product innovation in tech. Before the iPhone’s release, Apple conducted extensive market research to understand consumer preferences, pain points and unmet needs in the mobile phone industry. This research led to the development of a touchscreen smartphone with a user-friendly interface, addressing consumer demands for a more intuitive and versatile device. The result was a revolutionary product that disrupted the market and redefined the smartphone industry.

Example 2: McDonald’s global expansion

McDonald’s successful global expansion strategy demonstrates the importance of market research when expanding into new territories. Before entering a new market, McDonald’s conducts thorough research to understand local tastes, preferences and cultural nuances. This research informs menu customization, marketing strategies and store design. For instance, in India, McDonald’s offers a menu tailored to local preferences, including vegetarian options. This market-specific approach has enabled McDonald’s to adapt and thrive in diverse global markets.

Example 3: Organic and sustainable farming

The shift toward organic and sustainable farming practices in the food industry is driven by market research that indicates increased consumer demand for healthier and environmentally friendly food options. As a result, food producers and retailers invest in sustainable sourcing and organic product lines — such as with these sustainable seafood startups — to align with this shift in consumer values. 

The bottom line? Market research has multiple use cases and is a critical practice for any industry. Whether it’s launching groundbreaking products, entering new markets or responding to changing consumer preferences, you can use market research to shape successful strategies and outcomes.

Market research templates

You finally have a strong understanding of how to do market research and apply it in the real world. Before we wrap up, here are some market research templates that you can use as a starting point for your projects:

• Smartsheet competitive analysis templates : These spreadsheets can serve as a framework for gathering information about the competitive landscape and obtaining valuable lessons to apply to your business strategy.
• SurveyMonkey product survey template : Customize the questions on this survey based on what you want to learn from your target customers.
• HubSpot templates : HubSpot offers a wide range of free templates you can use for market research, business planning and more.
• SCORE templates : SCORE is a nonprofit organization that provides templates for business plans, market analysis and financial projections.
• SBA.gov : The U.S. Small Business Administration offers templates for every aspect of your business, including market research, and is particularly valuable for new startups. 

Strengthen your business with market research

When conducted effectively, market research is like a guiding star. Equipped with the right tools and techniques, you can uncover valuable insights, stay competitive, foster innovation and navigate the complexities of your industry.

Throughout this guide, we’ve discussed the definition of market research, different research methods, and how to conduct it effectively. We’ve also explored various types of market research and shared practical insights and templates for getting started. 

Now, it’s time to start the research process. Trust in data, listen to the market and make informed decisions that guide your company toward lasting success.

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Quickonomics

Market Research

Definition of market research.

Market research refers to the process of gathering, analyzing, and interpreting data about a specific market or industry. It is a systematic and objective way of collecting information about consumers, competitors, and market trends to make informed business decisions. Market research can involve various methods such as surveys, interviews, focus groups, and data analysis.

Let’s say you are planning to start a new business selling organic skincare products. Before launching your products, you want to understand the market demand, competition, and preferences of potential customers. In order to conduct market research, you can start by designing a survey to collect information from a sample of your target audience. The survey can include questions about their skincare routines, preferences, and willingness to pay for organic products.

Additionally, you can analyze existing market data and reports to understand the competitive landscape and identify market trends. This might involve examining sales figures, market share data, and consumer behavior patterns in the skincare industry.

Based on your research findings, you can make data-driven decisions on aspects such as product development, pricing, marketing strategies, and distribution channels.

Why Market Research Matters

Market research is crucial for any business because it provides valuable insights and understanding of the market environment. It helps businesses identify opportunities and potential challenges, make informed decisions, and minimize risks. By conducting market research, businesses can gain a competitive advantage, tailor their products or services to meet customer needs, and develop effective marketing campaigns. It allows businesses to stay ahead of the competition, attract and retain customers, and ultimately drive business growth and success.

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Why do we need market research?

The market is the place where supply and demand meet. This meeting of suppliers and buyers (customers) is about an economic asset, a product, or service. The basic principle of the market is the exchange of goods for a recognised equivalent , e.g. other goods or money. Market research is used to determine what a customer wants to buy and how much they would exchange it for.

What is the purpose of market research?

Types of market research, what does market research consist of, why is market research important.

With market research, a company can analyse which of its products are popular and which need improvement. Market research also uncovers information relevant to companies and target groups , such as prices and pricing range. This allows a company to make adjustments to the product, change advertising strategies, and make decisions for future business directions and products.

Market research is the systematic collection and analysis of data on the market are characteristics of an industry. In certain market situations, companies need this data in order to further develop their products or services and better adapt them to their customers. Market research thus serves as a marketing tool and is always used when a company wants to analyse the current market situation or assess market risks. It is also possible to determine in advance whether an offer is marketable at all through market research measures.

Market research provides information on the situation of the market. This information is important for a company to make customer-oriented decisions and not lose sight of the target group. Furthermore, market research can identify trends and use them for the further development of products as well as for other business decisions.

Via a product clinic – an analysis concept developed by Horst Wildermann – companies can collect customer options on a particular product by having it independently tested. Using the collected results, they can revise the product and make it more customer-oriented. Companies even use this method to assess competing products. In addition, market research can be used to find indications of the successes and failures of a product and the company in general.

In the long run, regular market research will help your company to move forward and make profitable decisions.

The purposes of market research include, but are not limited to, the following:

In market research, a distinction is made between the type of object studied and the type of information gathered . Both species can be divided into two further categories.

The type of object studied includes demoscopic market research and ecoscopic market research. The former examines subjective and objective information about a person, focusing on the individual consumer and collects demographic data. Ecoscopic market research, on the other hand, focuses on the industry’s objective market size. This includes the quality and quantity of goods or price of goods. Furthermore, procurements and sales market structures are examined, as well as buyer and supplier numbers.

Gathering information generally deals specifically with the collection of company-relevant data. There are two subcategories of this: primary and secondary research . With primary research, you conduct your own surveys according to self-chosen criteria in order to collect data about customers. With secondary research, surveys are carried out and evaluated using criteria and tests determined by third parties.

Market analysis – the definition

Whether you are starting a company, exploring your current market, or discovering a new one, a market analysis can help you evaluate the attractiveness of a market. A market analysis is a key element of every business plan and makes sure that your idea or your plan is fit for the future. Above all, investors attach a lot of importance to a thorough market analysis.

CRM tools: software for customer care

Customer care is one of the corner stones of a successful company – whether you are running an online shop or offering bank accounts. Even smaller companies can benefit from the use of CRM tools, which help to organise customer- or buyer data. These software systems automate and optimise the process of customer relationship management.

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Conjoint analysis: can a product establish itself on the market?

Conjoint analysis is conducted before launching a product on the market to obtain information about whether it will be competitive and which of its attributes would contribute to this. A variety of potential product designs are presented in a customer survey, and the survey participants are asked to indicate which one they would choose. The results reveal consumers’ priorities.

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Market Research Definition, Types, Tools and Benefits

Published on Jul 01, 2022

More than doubling in size from 2008 to 2021, the market research sector brought in over $76.4 (Statista) billion worldwide in 2021.  

What is Market Research?

Market research is the process of gathering, analyzing, and interpreting information about a market, about the product or service to be offered for sale in that market. It is also about the previous, current, and potential customers for the product or service. 

Data collection, analysis, and interpretation are the three main steps in any successful market research project. The data could pertain to a certain demographic, general consumers, rival businesses, or the entire market. This is the cornerstone of any thriving business. The findings can be used for anything from discovering a fresh opportunity to entering the market to developing an entirely new product or service. 

Small business owners can benefit greatly from conducting market research. It can eliminate uncertainty in the creative process and direct energy and funding toward the most promising ideas and initiatives. Many types of market research are conducted by businesses at many different stages. 

Market Research for Businesses  

Accurate and comprehensive data gives a plethora of information on potential and existing customers, competitors, and the industry as a whole, making it the bedrock of any successful commercial endeavor. It helps entrepreneurs weigh the odds of success before sinking a lot of money into a new firm. 

An essential aspect of every successful business plan is conducting market research to gather data that can be used to address potential marketing obstacles. In reality, it is not viable to develop tactics like market segmentation (identifying distinct groups within a market) and product differentiation (establishing a unique selling proposition for a product or service that distinguishes it from the competition) without conducting market research. 

Types of Market Research  

1. quantitative research .

The results of quantitative studies are typically presented using numerical and graphic representations. It's the gold standard for verifying or disproving hypotheses. It is possible to establish broad, overarching truths about a subject by conducting this kind of study. Experiments, numerically recorded observations, and surveys with a limited number of predetermined answer choices are all examples of common quantitative approaches. 

2. Qualitative research 

Words are the currency of qualitative inquiry. It's a tool for making sense of things like ideas and experiences. Using this method, you can learn more about a topic from every angle, which is very useful for researching controversial or poorly understood subjects. Open-ended interviews, written descriptions of observations, and in-depth analyses of the existing literature are all examples of common qualitative techniques. 

Qualitative vs. Quantitative Research 

Quantitative research focuses on numerical and statistical facts, while qualitative research examines concepts and interpretations. Both are necessary to learn various things. Comparatively, qualitative research draws its conclusions from interviews and documents rather than statistics and reasoning. Quantitative studies typically report their findings numerically or graphically, while qualitative studies report their findings verbally. 

3. Primary Research 

Primary data refers to a study that seeks to collect firsthand information from real-world participants. Primary research is data collected by the researcher themselves through various techniques of approaching the target audience directly. You have full legal and ethical rights to the data set you to create. Primary research can be challenging due to the time, money, resources, and familiarity with the topic that it demands. 

4. Secondary Research 

Secondary research is a study that is done after primary research has already been conducted, and it consists of analyzing, interpreting, and summarizing the results of the primary research. A more precise definition of secondary research would be any study that makes use of publicly available data. When conducting secondary research, scholars refer to information that has already been gathered, processed, and made public (and therefore, you do not own this data). Since the accessible data has already been evaluated and interpreted, the researcher just needs to determine the data he wants to use, i.e., the data that is necessary for his project. 

Primary Research vs. Secondary Research

Research that involves the collection of new information, or "primary" research, is distinguished from secondary research by the fact that it is conducted for the first time on a particular topic. Instead, secondary research makes use of information that has previously been gathered through primary research. The fundamental dividing line between primary and secondary research is whether the research has been done before. 

5. Market Research 

Market research on branding can help a business develop, launch, and sustain its brand. This may involve the firm's ethos, branding, visuals, ideals, or very name. Interviews, focus groups, and surveys are all viable options for conducting research. 

6. Customer Research 

Market research on customers is learning what factors most strongly affect your demographic of interest and what adjustments may be made to better attract and retain them as paying customers. The objective of this study is to acquire an intimate understanding of your consumer base and their habits and preferences as they relate to your business. 

7. Competitor Research 

Conducting market research on your competitors entails learning about their businesses and assessing how they stack up against your own. Your competitive product in the market or how to break into a new market could also be a topic of discussion. The study's overarching goal is to help your company prepare for the future by identifying methods to set itself apart from competitors and by learning from customers' opinions and suggestions. 

8. Product Research 

Conducting market research on your items is essential to ensuring they will sell successfully once they hit the shelves. Finding out how people feel about your product and if they feel it's valuable and functioning properly is the goal of this study. The ability to think creatively about enhancements and new features is another benefit. 

Benefits of Market Research 

According to a survey, the market research business is expected to increase at a rate of 12-14% (The Economic Times) per year through FY26, at which point it would have surpassed the $4 billion mark. 

The following is a list of the most important reasons and benefits of marketing research: 

It's a great tool for boosting companies' standing. The ability to think critically and act on that thinking is the key to success. You can keep your business one step ahead of the competition by conducting market research to expand your knowledge of your market or target audience. 

Reduces the potential for loss on an investment. This is a basic point to think about, but it is often crucial to the success of a firm. When starting a firm, it makes sense to spend what amounts to a negligible amount on research and testing the market, product, concept, or idea. 

Possible dangers and benefits are highlighted. Insurance against these two glaring pitfalls lies in both primary research (fieldwork) and secondary research (desk research). Opportunities or red flags may be uncovered through the combination of this with qualitative research for further investigation. 

You can learn more about the advantages and disadvantages of your own business and of your competitors. To achieve entirely objective reporting, it is generally recommended to collaborate with a market research agency. Take advantage of what you've learned from study to improve in areas where you're weak and to gain an edge over the competition. 

Strategic preparation is helped by this. Where do you stand with the core principles of your company plan? If it's supported by data, and you've put in the time and effort to do your own (hopefully continuous) research, you can rest assured that you're giving yourself the best chance of success in your commercial endeavors. 

This aids in the identification of developing tendencies. Being the first, the best, or coming up with the idea that nobody else has is typically what it takes to stay ahead in business. Taking the pulse of your industry on a regular basis is an important habit. You can learn more about the tools available to you to identify and capitalize on these trends by consulting with a research firm or expert. 

Helpful for firms in keeping up with the competition. Being the best calls for an insatiable need for knowledge and a propensity to experiment. The key to success, and the ability to maintain that success, is knowing how to effectively apply the information gleaned from market research, audience research, and data research. 

It includes forecasts for future income. One of the most important parts of any market study is a forecast, which looks into the future and predicts the size, makeup, and trends of the market you're interested in. This allows for the categorization of prospective clients. You should prioritize the market that is the best fit for your business rather than the largest or fastest-growing. 

It's geared toward meeting the wants and desires of its patrons. Many things in business, including research, benefit from keeping clients front and center. By reaching out to individuals through online panels, web forums, telephone surveys, in-depth interviews, and focus groups, market researchers can learn where their business's ideas, services, and products can be strengthened. 

Using this method, one can measure the progress of one's company against predetermined standards. Utilize data gathered from the market to study the competition, gauge employee enthusiasm, identify knowledge or skill shortages, and identify development opportunities. This will allow you to consider novel approaches, ideas, and resources for boosting your company's efficiency. 

Market Research Tools 

In order to better understand your market and target audience, you need to use market research techniques. It's fundamental to every company's success, and in today's more crowded marketplace, a thorough familiarity with your target market is more important than ever. Good news: you don't have to be an "insights genius" to get started collecting the data you need, owing to the proliferation of market research tools. Some of the best and most widely used methods of market research include: 

• Answer the Public 
• Attest 
• Google Trends 
• Social Mention 
• Remesh 
• Heartbeat Ai 
• Think With Google 
• Spyfu 
• Latana 
• BuzzSumo 
• Statista 
• Typeform 
• Otter.ai 
• Dimensions.ai 

How to Conduct Research for Your Business: Market Research Strategies 

Despite their different objectives, market research and marketing research should use the same framework for gathering and analyzing information about your company's target audiences. These help in primary research as well as secondary research.  

Clearly identify the problem at stake. Establish an initial research topic. Having a clear research question in mind will allow you to better organize your findings. 

Start by figuring out your financial and time constraints. How much money do you have to put into your study? When do you anticipate finishing data collection? Research, like any other tactic for expanding your company, should be carried out within your means. Nonetheless, it may be worthwhile to spend more money to receive the most comprehensive results available, especially if the questions you are answering are time-sensitive. 

Planning your approach and requirements. Find out what information needs to be gathered and figure out how to get it. Observation, surveys, phone calls, and focus groups are among the alternatives. Consult a professional research agency if you are unsure of how to organize your data collection. 

Pick a way to sample the data. I need to know how you plan on picking people to take part in your study. You may require a cross-section of the consumer population at large, a subset of the population who share a particular characteristic of their way of life, or just the opinions of those who are already familiar with your brand. Develop a plan for tracking down and contacting the persons who will take part in your research. 

Prepare a data analysis strategy. Think about the methods you'll use to examine the data. Do you require numbers for statistical analysis, or can you get a sense of things from qualitative, observable data? Spend some time learning about the many types of analysis so you can pick the one that will yield the most useful results for your study. 

Gathering information. The next step is data collection, which may begin once you have settled on a research question and developed a strategy for answering it within the bounds of your time and money. Research is often outsourced to professional firms or consultants by many corporations. 

Examining the information. It is important to apply certain methods of analysis to make sense of your data, no matter how simple it may appear at first. Which analytical techniques you employ are most suited to your data is a function of the information you've gathered. Also, this is the time to double-check for any mistakes that might have crept into your data gathering, analysis, or sampling. 

Make the report you need. Concluding your research with a written report is the next to last stage. From formulating a problem statement to discussing the findings of your data study, your report should include it all. 

Why is Market Research Important?

Over 44,000 businesses across the United States provide some form of market research. Their total annual income is around $23 billion (QuestionPro).  

The importance of Market Research is the following -  

1. Identifies new products or services

By conducting market research, a business can learn what consumers want and how to best meet their demands. Identifying the major challenges associated with creating a product or service can help you save money. It's useful for figuring out what customers value most and how to implement that into your product or service offering. 

2. Identifies potential customers

You may learn more about your clientele by analyzing demographic information like their gender, age, income, occupation, and interests. You'll have a better idea of who to target with your future advertising efforts if you have a clear picture of your current clientele. When a product is marketed to the wrong demographic, sales suffer. 

3. Establishes viability of a product or service

If your organization is considering introducing a novel product or service to consumers, you should find out if there is a need for it. Do people need this product? Do the people you plan to sell to actually want this product? Does it have any chance of succeeding, and does it even have a chance of being a viable trend? 

4. Anticipates and discovers future market trends 

If you are familiar with your market and the tendencies that are just beginning to emerge, you will be better prepared to build tactics to combat any negative tendencies that may threaten your company. As a result, you can use rising tendencies to your advantage and propel your company forward. 

5. Keeps your company ahead of competitors

Examining your company's performance in relation to that of its rivals is a prime use for comparative research. If they're much ahead of you, it's a fantastic chance to figure out what you're doing wrong. It is possible to devise business plans that will help you surpass the competition. 

6. Decide the best marketing strategy

Conducting research is helpful for pinpointing the optimal distribution platform for reaching your target audience. If you find out that a large portion of your audience prefers one form of communication over another, it makes sense to concentrate your efforts there. Because of the scarcity of these resources, it only makes sense to direct them toward endeavors with a high probability of success. 

7. Reduces risk and increases profitability

The ability to assess the value of potential risks in light of past performance and anticipated future market behavior is a crucial business skill. The success or failure of a business idea depends heavily on the results of market research. Understanding your consumers and their habits is another crucial step in risk reduction. Taking less risk leads to greater financial rewards. 

8. Identifies threats and opportunities

The SWOT analysis is likely familiar to many of you. The acronym SWOT refers to a company's "strengths," "weaknesses," and "All four of them can be figured out with the use of market research . While a lot of data can be collected through market research, not all of it needs to be used. Use only information that is directly related to your major objective (which you will have established in advance). 

9. Helps to understand existing customers

By conducting market research, you can learn more about your current clientele. Because of this complexity, you can't assume that you know what your clients require. If you want to be successful, you need to take the temperature of your clientele on a frequent basis. Satisfaction levels among customers can also be measured with the help of surveys. You can find out what is bothering them and make adjustments if necessary. If they are already rather high, you can examine the factors that led to this success and implement changes to maintain it. 

10. Assists in realistic goal setting

Goals that are more realistic can be established with the support of up-to-the-minute information on your market and customer base. Knowing what to expect and how to realistically expand growth over time is greatly aided by establishing a growth pattern throughout time. Setting objectives that are too lofty will cause you to waste time and energy trying to achieve something that is impossible. 

How Efficient is Market Research? 

You should only invest time, energy, and money into market research if you expect to see a favorable return on that investment. Because it is so worthwhile, market research continues to play a significant role in the success of any organization. Market research won't ensure your company's success on its own, but it will arm you with the data you need to make the moves that will. 

Many of the advantages of this type of study were examined, but the drawbacks were also taken into account. If you don't conduct market research, you run the danger of losing clients to the competition, missing out on growth prospects, being more susceptible to hazards, making bad business decisions, and more. Some companies succeed without first doing their homework, but those situations are unusual. To build your firm and avoid typical errors, conduct market research. 

Market Research Methods  

Although there are a variety of approaches to conducting market research, the majority of companies opt to utilize one of the following five fundamental approaches: surveys, focus groups, personal interviews, observation, and field trials. Which strategies you decide to implement for your company will depend on the kinds of data you require as well as the amount of money you are ready to pay. Some of the major methods of market research are following - 

1. Surveys 

Surveys ask participants questions. They can use numerous survey methods. Surveys are a cost-effective technique to collect data for the study. Written surveys may encourage truthful responses since participants feel like they're speaking privately. 

2. Discussions 

Focus groups are moderated discussions. Companies assemble consumers to conduct focus groups, pose questions, and record replies. Participants' replies may reveal what consumers want in a firm or a product because they represent a broad group. Focus groups offer longer participant interaction than surveys. 

3. Interviews 

An interview combines focus group and one-on-one survey aspects. It includes recording one participant's comments at a time. Open-ended questions elicit in-depth answers from the interviewee. Researchers can ask follow-up questions and let interviewees ask their own. 

4. Social media listening 

Social media users routinely discuss corporations and their products. Researchers can search for discussion topics and measure consumer sentiment through social media listening. 

5. Observations 

Observation in market research means studying how consumers shop. Filming shoppers in a store and studying their shopping habits is common. This strategy can reveal their natural selves if they are ignorant of the observation. 

6. Experiments 

In a field trial, a corporation lets participants use a product under typical conditions and collects data. Participants' feedback was used to improve the product. 

7. Competitive analysis 

Competitive analysis is a secondary market research process where companies acquire and analyze competition information. It entails identifying primary and secondary rivals and analyzing their offerings, revenues, and marketing methods. 

8. Statistics 

Public data entails seeking and evaluating public market data. This research is often free online or in libraries. Research centers, polls, or government databases may provide this information. Public data is often used to confirm or compare primary market research. 

9. Purchased data 

Companies without the time or resources to perform their own market research can buy it. Several market research companies sell database subscriptions. Small and medium-sized businesses that can't afford primary market research may benefit from this approach. 

10. Analysis of sales data 

Competition analysis is just one way that may be used in tandem with sales data analysis to show how different business tactics affect revenue. It can also reveal consumers' buying behavior and consumer trends. 

Functions of Marketing Research  

The following are the main functions of Marketing Research - 

Description: Marketing research details customers. Age, sex, education, income, etc., are listed. It describes the market and competitors. This description helps marketing decision-makers and problem-solvers. 

Evaluation: Marketing research evaluates firm performance. It evaluates production and marketing policies. It measures customer reactions to product quality, price, packaging, advertising, sales, and promotions. If consumers dislike the company's policies, they must alter them. It contrasts company and rival policies. 

Explanation: Marketing research answers all marketing questions. It explains why sales are declining, why retailers are unhappy, etc. It explains the problem's causes. It gives a solution. 

Prediction: Marketing research forecasts. Predictions are future forecasts. It predicts sales, market prospects, dangers, marketing environment, customer behavior, etc. All predictions may be wrong. Predictions help the organization create plans and policies. It helps seize possibilities. It prevents future hazards. 

Decision Making: Marketing research aids decision-makers. It gives decision-making data. Decision-making involves choosing between options. Decision-making requires accurate data. MR helps the marketer decide. It gives decision-making data. It offers alternatives. It compares each option's pros and cons. It helps marketing managers choose the right action. 

Conclusion 

The world's markets are changing at a dizzying rate, making it more important than ever for companies to adapt quickly enough to be competitive. One method is to conduct market research. The results of your market research and analysis will provide you with a thorough understanding of your target audience's wants and needs, as well as your competitors' strengths and weaknesses. 

The key to making your business successful in the face of intense competition is identifying and fixing your deficiencies. The right market research tools will aid you in doing just that! The time to begin expanding your company is now.  

With a presence in New York, San Francisco, Austin, Seattle, Toronto, London, Zurich, Pune, Bengaluru, and Hyderabad, SG Analytics, a pioneer in Research and Analytics, offers tailor-made services to enterprises worldwide.    

A leader in  Market research services , SG Analytics enables organizations to achieve actionable insights into products, technology, customers, competition, and the marketplace to make insight-driven decisions.  Contact us  today if you are an enterprise looking to make critical data-driven decisions to prompt accelerated growth and breakthrough performance.

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Introduction to Market Research

• First Online: 02 November 2017

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• Erik Mooi 4 ,
• Marko Sarstedt 5 &
• Irma Mooi-Reci 6  

Part of the book series: Springer Texts in Business and Economics ((STBE))

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Market research is key to understanding markets and requires the systematic gathering and interpreting of information about individuals and organizations. This will give you an essential understanding of your customers’ needs, a head start on your competitors, allow you to spot potential problems, and future growth. Drawing on real examples, we show the value of market research, describe its main purposes, and explain how market research differs from marketing research. We explain what makes, or breaks, a successful market research study and describe when market research is most needed. We also provide a description of the different types of market research providers.

• American Marketing Association (AMA)
• Field service firms
• Full service providers
• Limited service providers
• Segment specialists
• Specialized service firms
• Syndicated data

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Mooi, E., Sarstedt, M., Mooi-Reci, I. (2018). Introduction to Market Research. In: Market Research. Springer Texts in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-5218-7_1

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Market Research: The Definitive Guide (2023 Update)

• 2 years ago

Starting a business is a challenging endeavor that requires time, money, and continuous learning. In our blogs, we cover how to start a business with brief overviews. In our hub, we aim to provide you with everything you need to go through each step. Our first step is conducting market research.

Throughout the steps, we’ll provide insights from Paul Akers, the owner of FastCap, and a Lean Expert who has created hundreds of products for woodworkers and cabinet makers.

There are four basic steps to conducting market research:

• Understand “what is marketing research and which type is right for my business?
• Perform market research.
• Analyze the data.
• Use the research to make decisions.

We’ll start by exploring some of the concepts involved in market research analysis to help you perform it yourself.

Step 1: What is market research in business?

Market research is the process of gathering information about target customers to better understand their views about a product or service. The primary ways of classifying market research are:

• The method of the collection
• Common types of market research

Let’s look at each.

The method of collection

Market research normally uses six methods of collection when looking for answers:

Primary market research

Secondary market research.

• Qualitative research

Quantitative research

Exploratory research.

• Specific Research

Primary research is the original research conducted directly by an organization. It is used to find out what customers are interested in. It can be done through questionnaires, interviews, or videos. Primary market research is used for understanding the underlying needs and desires of consumers.

Primary market research helps us to understand the needs, wants, and behaviors of potential buyers. It is the basis for the buyers’ persona. It helps us to formulate marketing strategies that can be used to meet those needs and wants.

Secondary market research is a process of finding information about a product or service through other sources. This includes looking up other companies that are in the same market as your company and finding out what they are doing.

A company should conduct secondary market research to find out if the product or service has been done before, which will help them figure out how they can differentiate their product from competitors.

Secondary research can be used to gain information about competitors, pricing, distribution channels, etc. It also helps the company save time by not having to conduct primary research that has already been performed.

Researching competitors before you start your business is not only crucial for success but essential for survival in the business world where everyone is trying to get ahead.

What is the difference between qualitative and quantitative research?

One is focused on themes while the other is focused on information that can be processed numerically. Let’s look at each.

Qualitative Research

Qualitative research is focused on finding themes that run through interviews and surveys. This type of research is more focused on opinions and is more art than statistical analysis, but in some cases, you can turn this type of research into data that can use statistical analysis.

For instance, a question like the one below converts a qualitative data point into a quantitative data point, making it easier to compare how happy someone was with their food.

You might perform qualitative research along with market validation after you have created a prototype of a new product.

This research is focused on information that can be easily processed with statistical analysis software. For instance, median household income would be easy to statistically calculate if you gather the data for the target customers’ income. Market research analysts love this kind of data because it is easier to process.

Exploratory research is market research that looks for a better understanding. For instance, you may have come to this site doing exploratory research about how to do market research for a startup. After you’ve gained broader information about marketing research methods, you might move on to more specific research.

Specific research

Specific research is when market researchers are looking to answer a very specific question using market data. This research might include searching for a specific concept or item. For example, the lowest cost statistical software for a company that will have ten users of the software. You might also want to research the history of a business location before deciding to sign a lease because some shopping centers have high turnover.

To find the answer, you’ll probably want to go with Google Workspace because Forms, Sheets, and other useful business tools are included in the same package as your email. Google is the primary email provider for small and medium-sized businesses.

Market research may include a combination of primary and secondary data, quantitative and qualitative data, exploratory and specific research. Now that you understand the market research definition, let’s look at the common market research methods and what questions they are trying to answer.

Common types of market research methods

Most companies will perform 13 types of market research:

• Literature reviews

Focus Groups

Observation, customer utilization research.

• Buyer Persona Research

Market Segmentation Research

Pricing research, competitive analysis research, customer satisfaction and loyalty research, brand awareness research, campaign research.

In each of these, market researchers attempt to answer different questions. Let’s discuss each.

Literature Reviews

One of the leanest ways to do market research is a literature review. With your laptop or cell phone, you can easily find vast amounts of data about your market through sources like:

• Statista – Provides graphs that are easy to process for most economic subjects
• Competitors’ research – Your competitors have probably already done the research. Find it so you don’t have to duplicate the effort.
• Industry trade organizations – Companies
• Think with Google – Helps marketers gather information using Google’s extensive database of consumer behaviors
• Census Bureau – The U.S. Census Bureau is a government agency that collects data on a variety of subjects including a full count of the U.S. population every decade.

After you’ve gathered everything available through market research, it’s time to create some surveys.

Surveys are the most common type of market research because they are so easy to conduct and are low-cost. With software like Google Forms and Facebook, you can easily create a survey, distribute it, and analyze the data on your own.

When creating a survey, it is important to be aware of some best principles including:

• Use a variety of style questions: scaled, multiple-choice, and open-ended questions are typically used with success.
• Avoid biased questions that lead the survey participants to a preferred answer. They will harm the validity of your research.
• Be respectful of the participants’ time. Unless you are paying them, try to keep the survey to 10 questions or less. If you are paying them, $50-$100 per hour is typically what market research firms will pay for longer surveys.
• Make sure to gather demographic data and contact information for follow-up.
• Practice proper sampling methods. In most cases, you won’t need more than 1,000 survey participants, but you can use the table below to establish how many people to include in your survey.

You can normally gather the data you need through this method for under $5 per survey participant, making it one of the most effective and lean methods of gathering market research.

Another great tool is a market research interview. They follow the same principles of surveys but have the benefit of the ability to ask follow-up questions. Using these with select survey participants who gave meaningful input might be useful.

Interviews are much more labor and capital intensive than surveys, so only use them for follow-up questions for your target market.

Keep reading to learn about focus groups.

A focus group brings 5-10 people together to discuss a product or service with a moderator. These will typically run $4K-$10K per group, and they are not conducive to being conducted by novices because of the challenges involving focus groups dynamics.

If you are going to use this type of research, we’d suggest hiring a professional market research firm to assist you in the recruiting and managing of a focus group. If you are trying to run lean market research, you should skip focus groups entirely.

Keep reading to learn about observations as a market research tool.

Observation can be an extremely powerful market research tool. Using observation, you can learn how people actually interact with your product and service, but it doesn’t allow you to actually communicate with them.

Observation is particularly powerful for software products because tools like Google Analytics and Crazy Egg help you see how people interact with the software. This makes it easier to fix areas where customers stop interacting with the application.

You can perform market research through observation in different ways. The primary ways of conducting market research through observation are covert observation and overt observation.

Covert observation is collecting market research data without the participants’ knowledge. This type of data collection can be achieved through analytics software on the web or using security cameras in stores where people can test your product.

Overt observation is when the participants are aware of the marketing research and provide feedback to questions. When you conduct market research about a product or service this way you will get more information about potential customers’ opinions, but it may be influenced by their awareness that you are conducting market research.

Effective market research can gain actionable insights from both methods. Overt observation is better when you know who your potential customers are and you want to establish whether they like your business idea, while covert observation is helpful for establishing who naturally gravitates to a product or service.

You’ll want to take notes any time someone performs a desired or undesired action. If the participant is aware of the market research analysts, you’ll also want to ask them what influenced the decision.

Cautionary Tale: During the early stages of FastCap, Paul would gain actionable insights from conventions, but he stopped conducting research at such events because he found them costly to collect data. He also found that competitors would try to steal his ideas.

To truly make the most out of this tool, you’ll need to combine it with other research methods like surveys to gain user input after the observation.

Customer utilization research is focused on how your current customers use your products or services. Marketing professionals will normally use customer surveys to perform this exploratory research. The following questions are questions that an online survey might include:

• How often do you use our product or service?
• What do you like most about our product or service?
• With 1 being highly dissatisfied and 5 being highly satisfied how would you rank our product?
• What do you like least about our product or service?
• With 1 being highly dissatisfied and 5 being highly satisfied how would you rank our customer service?
• Have you tried any of the competitors’ products? If so, which ones? How does our product compare to theirs?
• What features would you like added to our product?
• With 1 being highly dissatisfied and 5 being highly satisfied how would you rank our pricing?

You can replace “product” with “services” in any of the questions above. In addition, it would make sense to include the name of the specific product or service they bought instead of the word product or service.

These questions will help you establish what real customers think of your products and services. This type of market research data provides insight into aspects including competitive advantage and creating buyer personas for potential clients based on the data collected.

FastCap has an interesting take on this type of market research. They actually offer tradesmen a 2-5% royalty for product suggestions that they decide to take to market.

Buyer Persona: Identify Your Target Market

A user persona is a character that represents your target market. A user persona will include aspects including:

• Demographics – age, gender, location, marital status, number of kids (if applicable to your product)
• Financial Information – Employment status, job title, household income, homeowner status
• Behaviors and Interests – Hobbies, products they like, buying habits, where they get information about products and services
• Market size and market trends

You can create similar personas for B2B businesses using stats like:

• Number of employees
• Age of company
• Titles of decision-makers
• Market size

If you are using analytic tools, they collect most of this information. You can add a form to check out or that opens when the user is leaving the site to ask questions about:

• Who are they? In FastCap’s case, they would be carpenters and cabinet makers.
• What are they trying to achieve? They don’t want exposed screw holes in their cabinets.
• What is the main obstacle? The products on the market are ugly, difficult to use, and expensive.

What if you find that your buyer persona is too broad to use to identify potential clients? We’ll discuss how to address that next

A small business might need to do market segmentation research if all their clients don’t fit neatly into a single user persona. For instance, FastCap would have at least three market segments that they might want to prepare marketing materials for:

• Distributors that will be selling their products to carpenters
• Tradespeople who will be using their products
• Coffee shops that buy caps for drinks so people don’t burn themselves (it’s an ancillary use for a FastCap that he decided to market to restaurants with To-Go cups)

As you can guess, each market segment would have characteristics that make them different, and you wouldn’t want to market to them all the same. You’d use market segmentation research to identify what those key characteristics are and create a user persona for each.

The term pricing research is refers to establishing a fair price. Pricing research should be done before you open a business or launch a new product because it can impact whether the business is worth starting.

To understand the benefits of pricing research I should discuss pricing strategies first. Businesses normally use either the value-added method or the cost of doing business.

The value-added method charges a price that is based on the value that is provided to a client. An example of this pricing is how Tesla prices solar roofs. They determine the price using the cost of a comparable roof plus the net present value of 30 years of energy in the target market.

The cost of doing business is calculated by adding up all your expenses (including taxes) and adding the amount of profit you want to make, then dividing by the number of units you want to sell.

Both of these pricing strategies have issues though. In the value-added method, how do you determine the value that is added? In the cost of doing business method, what is the maximum your target market can sustain? Both of these are answered by researching comparable products.

While there may not be something identical on the market, there is always something that serves a similar purpose. For instance, when portable MP3 players were created, the cost of the MP3 player plus downloading songs should have been compared to the cost of a portable CD player plus the cost of all the CDs.

Competitive analysis research is focused on developing a thorough understanding of the market and identifying how you want to differentiate yourself in a market of comparable competitors. This type of research will be included in a business plan . You’ll want to focus on aspects of the industry including:

• Identify competitors and the products they offer. This can be done through their websites.
• Analyze sales trends. You can use industry resources and company quarterly reports.
• Research how economic indicators impact the industry. For instance, consumer staples tend to do better during a recession, while consumer discretionary products tend to do better as an expansionary cycle matures.
• Understand the impact government agencies have on the industry.
• Has the industry reached market saturation? If 9 out of 10 people have already purchased the product you are selling, you are probably late to the game. Before you spend money in an industry that is at capacity, you should review the following bullet point.
• What is the job outlook for the industry? The Bureau of Labor Statistics (BLS) creates an occupational outlook handbook for every industry. You want to be aware of the growth prospects. If both of the last two bullet points are going in the wrong direction stay clear.

The document you create from this research should be detail-oriented, contain lots of external links to prove sources, and show analytical skills that show an understanding of the industry. This research and the communication skills used to present it are often deciding factors when applying for loans.

Customer satisfaction and loyalty research are focused on building relationships that increase the lifetime value of your existing customers. With big data and rewards programs becoming more affordable, small business owners can now offer similar types of rewards to what people see at major chains.

You’ll want to use the market research process to establish the answer to questions like:

• Should I use a point system or a number-of-purchases reward system?
• How big of a reward should I offer for repeat customers?
• Should I offer referral bonuses? If so, how much is meaningful?
• What are my competitors doing?

To answer these questions, you’ll need to establish:

• How often your average customer buys your product or services. You can find this in Customer Relationship Management (CRM) software. Alternatively, you can sort receipts by credit card if you don’t already have an app or loyalty program that people sign up for.
• If you have a CRM, establish what percent of customers interact with your business daily, weekly, monthly, or irregularly. Also, calculate the first two bullet points for each group to see if different promotions make sense.
• How much your average customer spends on each trip. Calculate revenue or number of receipts.

For example, you might target people differently by offering daily customers a free upgrade every $50 spent, while weekly customers you might want to offer every 5th visit they get a free product. In both scenarios, this can reward customer loyalty and encourage more spending in the future by slightly shifting their habits.

Let’s look at how to understand brand awareness.

Brand awareness research is focused on establishing what your target audience knows about your business, how they perceive it and giving you input on improving brand awareness.

Facebook has a feature for brands running ads that is really useful for establishing brand awareness called Brand Survey Tests . It is currently an experimental stage, but here’s how it works:

• Divides target market into two groups, one that is shown ads and one that is not shown ads.
• Collects data on both groups’ clicks, purchases, and other actions with your company
• Required: “Do you recall seeing an ad for [page name] online or on a mobile device in the last two days?”
• “Have you heard of [page name]?”
•  “How would you describe your overall opinion of [page name]?”
• “Are you familiar with [Page name]?”
• “Will you recommend [page name] to a friend?”
• Provides an analysis of what the market research process found.

This can be a great tool for understanding if people recognize your brand name .

Campaign research is focused on reviewing past business strategies to promote your products and services so that you can establish what worked, what didn’t, and why. In today’s marketing boom, people often forget the importance of including lessons learned when closing a project.

During this process, you’ll want to look at questions like:

• Did we reach enough people to be a representative sample? Typically, over 500 will be enough to count as a representative sample,
• What was the return on investment?
• Where did people drop out of the sales funnel?
• Did the campaign have a favorable reception?
• Should we try to duplicate the content in future campaigns?
• What should we avoid in future campaigns?

Now that you know about some of the types of market research techniques, keep reading to learn why market research is so important.

Why is market research important?

Because market research is the act of investigating consumer preferences as well as economic, social, and statistical data, it helps to better understand the customer and guides business decisions in the areas of:

• Customer insights – Market research can be used to gain insight into how customers behave, what they like and dislike about products, and what they think about different marketing strategies.
• Marketing strategy development – Market research can be used to develop a marketing strategy by identifying the needs of the market, target audience, and competitors in the industry.
• Product development – Market research is key for product development because it helps companies discover what customers want to buy or use next. It also helps companies see how their product will fare against other similar products on the market today or in the future.
• Product pricing considerations – Market research helps companies determine prices for their products by understanding expenses to continue production.

Now that you understand why market research matters so much to businesses, let’s take a look at how to conduct market research.

Step 2: Conduct market research

As you begin to get a handle on your goals and the questions you need to answer, it’s time to do the market research. At UpFlip, we are fans of Lean methodologies , so we figured we’d give you an introduction to lean market research.

• Put together the list of questions you are trying to answer based on the previous sections. Structure them in a way that answers can be analyzed easily.
• Seek out data that is already available and document the findings that impact you under each question.
• Establish the minimum number of online surveys or observations needed for a statistically accurate sample using our calculator.
• Find participants and gather data. When possible use software for collecting data.
• Proceed to analyze data.
• Implement business strategies.

Using these strategies will make it easier to do effective market research quicker and at a lower cost. No need for costly market research analysts.

If you’d like to learn more about how one of the United State’s most successful Lean practitioners approaches market research check out our interview with Paul below.

Keep reading to learn about analyzing the results

Step 3: Analyze the results

Market research analysts look for trends in data gathered from market research. The analysis involves both statistics and looking for patterns. To make it easier to analyze data, it is helpful to use software while gathering the data. If you don’t, you’ll have to input it into a spreadsheet manually.

The first step is to clean up data. This means fixing misspellings and other improper collection like zip codes where state names should be. Next, remove obvious deviations from the sample. (If someone says they buy your products 100 times per day, that’s probably not right.)

After that, you can do data analysis using functions like:

• Mean – sum divided by the number of surveys
• Median – (Number of surveys+1)/2
• Mode – Most common answer
• These can also use conditional statements such as “IF male and Under 45 mean”

With some forms of data, you might find visualization easier, so we are providing some market research examples of visualization of data. Let’s look at some common visualization methods.

The flow model is simply a visual representation of how interactions occur. Check out the behavioral flow for website visitors in Google Analytics. This model can be useful for establishing where issues occur and how processes work.

Affinity Diagram

An affinity diagram is used to group people, businesses, or other items together by a common feature. For instance, you might group by male and female, profession, or age. This can make it easier to tell whether one group tends to prefer your product or service more than another group does.

If you want to learn how to do this in Microsoft Excel, check out the video below.

Lucidcharts is another software you can use for affinity diagrams.

Customer Journey Map

A customer journey map is a visual representation of the path people take from being unaware of your product to becoming a paying customer, and eventually a potential advocate. Customer journeys are typically broken into five steps in the process:

• Awareness – The customer knows about the product
• Consideration – When the customer starts researching the product
• Purchase – The customer buys the product
• Retention –Keeping the customer happy, repeating purchases
• Advocacy – When the customer goes from being a satisfied customer to singing your praises to others.

The stages can vary for different groups of people, but awareness is typically a matter of advertising. This can be in the form of an online ad, a coming soon sign when preparing to open up a location, or even current customers (or influencers) advocating for your brand.

Consideration begins when the customer starts researching your company. This phase might  be:

• Short : Searching “gas stations near me” and immediately going to get gas
• Long : Spending hours researching the best shoe, best price, and best place to buy it.

The point of understanding a journey map is to be able to understand how many points of reference a person has before buying your product. Then you can use that to speed up the awareness and consideration phases while encouraging advocacy by your long-term customers.

Now that you understand “what is market research?” how to perform the market research, and how to analyze the research, there’s only one thing left…

Step 4: Use the info for decision making

The final and most important part of performing your own market research is converting the research into business practices to improve revenue. Depending on what you find in the research, this step may include:

• Adding new user personas and marketing campaigns
• Narrowing your target audience
• Discontinuing marketing campaigns
• Investing in software to increase customer loyalty or lifetime value
• Documenting the planned strategies for a business plan
• Rejecting the business idea completely

Thank you for reading!

Wherever the research leads you, UpFlip is here to help you run a better business. We use your feedback to create content that helps you build a better business. Which sections of this did you find beneficial and which would you like to learn more about?

Brandon Boushy

Brandon Boushy lives to improve people’s lives by helping them become successful entrepreneurs. His journey started nearly 30 years ago. He consistently excelled at everything he did, but preferred to make the rules rather than follow him. His exploration of self and knowledge has helped him to get an engineering degree, MBA, and countless certifications. When freelancing and rideshare came onto the scene, he recognized the opportunity to play by his own rules. Since 2017, he has helped businesses across all industries achieve more with his research, writing, and marketing strategies. Since 2021, he has been the Lead Writer for UpFlip where he has published over 170 articles on small business success.

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Market Research: Meaning, Definition, Process, Elements, Importance, Objectives

Marketing research is defined as the objective and formal process of systematically obtaining, analyzing and interpreting data for actionable decision making in marketing.

This definition lays stress on two aspects, namely, objectivity and systematic process in the collection and analysis of data. In fact, marketing research should not be allowed to be influenced by personal views and considerations.

Before undertaking any research study it is essential to delimit the primary objectives of the project and define the methodology of undertaking the project in as much details as possible.

Marketing research as an integral part of a MIS, should prove a flow of information inputs, mainly from external sources, useful in marketing decisions making. Marketing research is carried on in the effort to learn something reliable about a specific marketing problem encountered by the management.

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Learn about:-

1. Introduction to Market Research 2. Meaning of Market Research 3. Definition 4. Objectives 5. Importance 6. Process 7. Areas 8. Approaches 9. Basics 10. Acceptance 11. Primary Marketing Research 12. Integration 13. Evaluating the Benefits 14. Issues.

Market Research: Definition, Objectives, Importance, Process, Areas, Approaches, Acceptance, Integration and Issues

• Introduction to Market Research
• Meaning of Market Research
• Definition of Market Research
• Objectives of Market Research
• Importance of Market Research
• Market Research Process
• Areas of Market Research
• Approaches to Market Research
• Basics of Market Research
• Acceptance of Market Research
• Primary Market Research
• Integration of Market Research
• Evaluating the Benefits of Market Research
• Issues in Market Research

Market Research – Introduction

Marketing programme starts from the product idea and does not end until customer wants are adequately satisfied. Customer is the pivot around whom the entire marketing operations revolve. Alpha and omega of marketing is consumer satisfaction. Beginning and end of marketing management is marketing research. Learning more about consumers and dealers and about marketing mix gene­rally is the heart of marketing research.

As a business grows larger and as management becomes more remote from the market place, marketing management has to rely more heavily on marketing research as a managerial tool in solving any problem in the field of marketing. It is an invaluable tool in decision-making based on scientific investigation and analysis of a marketing problem.

Advertising has its own problems and pitfalls. We have to be sure about our targeting and segmenting. We will have to understand what makes the consumers buy. We will have to find out whether the right audience watches our sponsored programmes. What is the effect of ads on sales? There are some questions, which the advertisers face everyday. While deciding about such questions, advertisers need inputs of some research.

Mostly they rely on marketing research (MR) which is systematic collection, processing and interpretation of data regarding any problem of markets ranging from product, distribution, price, and promotion to consumers, markets and forecasting. Marketing research is broader than the outdated term market research, which is information about only a particular market.

Marketing research includes advertising research and media research. Though marketing research is an invaluable input to advertising decision making, it only supplements our intuition, experience and judgement.

Marketing Research is not a new activity. However, it has been revitalized, enlarged, and formalized since World War II. With the development and recognition of the so-called “marketing con­cept” in recent years, having the objective of furnishing consumer satisfaction, marketing research has been recognized as one of the major marketing activities, co-equal in status with sales, advertis­ing, new product development, pricing, distribution, and market­ing services.

Market Research – Meaning

Research is the process of gathering, recording and analyzing of critical and relevant facts about any problem in any branch of human activity. It indicates critical and searching study and investigation of a problem, a proposed course of action, a hypothesis or a theory.

Marketing Research:

Marketing research is a systematic, objective and intensive search for and analysis of the data (facts and figures) relevant to the identification and solution of any problem in the field of marketing.

Market research includes:

1. Size of market,

2. Location of customers,

3. Description of customers (age, sex, income, education, standard of living, etc.)

4. Analysis of market demand,

5. Customer needs, habits, buying motives, etc.,

6. Dealer wants and preferences,

7. Degree of competition.

Market Research – Definition

Most formal definitions are similar to that adopted by the American Marketing Association- “Marketing research is the sys­tematic gathering, recording, and analyzing of data about prob­lems relating to the marketing of goods and services.” Operationally this means finding out facts about the market for goods, the numbers and types of consumers, the product itself, channels of distribution, and consumer motivation and behavi­our, plus developing advertising and sales promotion ideas, and eventually testing them.

Some of the commonly used names of marketing research are – market research, product or consumer research, distribution research, motivation research, copy research (in advertising), and sales planning and control research.

The American Marketing Association defines marketing research as – “The systematic gathering, recording and analysis of data about problems relating to marketing of goods and services”.

According to Kotler, “Marketing research is the systematic design, collection analysis and reporting of data and findings relevant of a specific marketing situation facing the company.”

The key word in the above definition is ‘systematic’. This is the difference between research and haphazard gathering of findings. For a study/research to be systematic there must be two qualities in the least. First, it should be orderly so that the measurement has accuracy and there is a fair cross-section. Second, it should be impartial in analysis and interpretation.

Now for a research to be systematic it should be planned in advance. Moreover to complete it, it should be interpreted. We thus arrive at a definition of Marketing Research; “Marketing research is the planning of and systematic gathering, recording, analysis and interpreting data about problems (or opportunities) relating to the, marketing of goods and services”.

Market Research – Objectives

(1) Marketing Research is used in the formulation of all marketing plans, policies, programmes and procedures.

(2) It is employed for evaluation of these plans, policies, etc. when they are brought into practice.

(3) It is used in reducing and minimising all marketing costs, particularly, selling, advertising, promotion and distribution costs.

(4) Marketing problems demanding best solution through mar­keting research can be classified under three major heads – (a) Prob­lems relating to the product itself; products includes branding, packaging and labeling, (b) Problems relating to consumer markets, (c) Problems relating to each phase of the entire marketing process.

(5) Programmes of marketing research incidentally provide insurance cover for the survival and growth of the business in a dynamic economy.

(6) Marketing Management through marketing research can bring about the sale of right product (brand and package) through right channels to right customers at right places and at right prices by evolving right plans, policies and programmes with the help of right personnel.

(7) The main objective of marketing research is to enable manufacturers to make goods acceptable and saleable and to see that they reach the market more easily, quickly, cheaply and profi­tably without sacrificing consumer interest.

What can Marketing Research do for Business? There are six faithful service-men at the disposal of market researchers.

Marketing research finds out for the manufacturer, where are his customers, what they want, when they want it, and where, and how much they are willing to pay for it. Marketing research ascer­tains for the marketing middlemen (wholesalers and retailers) what goods to purchase, when and at what prices, how to advertise and display goods, how much to charge, what delivery and other services to provide.

Marketing research demonstrates to ‘the advertiser how to do a better job of telling the people about particulars of goods or services so that they become presold goods after advertising.

With adequate knowledge obtained by marketing research – (1) Producers need not make unwanted goods, need not offer those through wrong outlets to persons who are not interested. (2) Mer­chants need not stock unwanted goods, offer them at the wrong season in the wrong quantities or at wrong prices. (3) Advertisers need not make mistakes in what they say, to whom they appeal, and how they appeal to the audience.

To short, marketing research enables producers, merchants, distributors and advertisers to avoid mistakes either in manufacturing or in marketing. To that extent it can minimise business failures and maximise profitability. Please note that there are specialised consultancy service organisations offering expert advice and services relating to marketing research, advertising research, etc., and enable top management to solve marketing problems.

Market Research – Importance

Mass production by power-driven machinery in anticipation of demand for ever-widening market created special problems of distribution.

(a) Widening of Communication Gap:

Ever-expanding markets required numerous middlemen between producer and consumer. Each middleman erected a sort of wall which blocked the backward flow of communication regarding consumer needs and dealer needs to the manufacturer. Size and specialisation within the business unit and intervention of numerous middlemen between producer and consumer created a chronic gap of communication — lack of returned flow or feeding back of information from consumer to producer.

The widening of communication gap is the chief single factor for increasing importance of marketing research to fill up the communication gap between consumer and the producer. Marketing research alone can provide first-hand knowledge of consu­mers and changes in the pattern of demand.

(b) Emergence of Buyers’ Market:

Emergence of buyers’ market and increasing competition demanded continuous need of marketing research to ensure maximum consumer satisfaction and repeat purchases and to lay down appropriate marketing strategies to meet competition, to survive and grow in a competitive market. Marketing research can establish best positive correlation between the product/brand and consumer needs and preferences.

(c) New Marketing Concept:

The marketing concept was first articulated in 1952 by Ralph Cardines, the top marketing execu­tive of General Electric Corporation of the U.S.A. Marketing research has become the corner-stone of the marketing concept. No business firm can be market-oriented or customer-centered without the effective use of marketing research.

The moment customer be­comes the center of the marketing universe, marketing research assumes unique importance and it becomes an invaluable management tool to formulate accurate and realistic plans and programmes of marketing, advertising and sales promotion based on realistic informa­tion of consumer demand — changing tastes, preferences, whims, fancies, etc. Marketing research can ensure quick way to profit viz. to serve the customers in the ways in which he/she wants to be served.

(d) Marketing Change:

There is nothing permanent except change. Change alone is constant. Change is the essence of life. Change means progress. Change is the common denominator in planning, organising, motivating and controlling marketing activity. Marketing research enables management to anticipate, meet and adapt creatively to accelerating conditions of change, particularly in consumer demand.

The real challenge to marketing management is to firmly believe that changing a business—finding its new role, new customers, new products, new markets – is even more important than efficient operations of the business. Marketing research can easily help the management in managing profitably marketing change.

(e) Changes in Technology:

Marketing research can solve the problem of catching up with new developments brought about by unprecedented growth of science and technology. It can help management to bring about prompt adjustments and innovations in product design, packaging, advertising, sabs promotion and distri­bution policies so that the business can keep itself up-to-date in the dynamic market place.

Market Research – Process

Research follow a step-by-step sequence as given below:

1. Problem Definition and Research Goals :

In practice, we have clear-cut advertising problems in most of the cases. However, sometimes the problem is hidden and must be ferreted out. What decisions are we going to take in the light of research input? This helps us in identifying the problem correctly. Once the problem is identified, we must put research goals clearly.

Some typical research goals are:

(i) To measure awareness about our product in the target audience after 2 months’ campaign.

(ii) To assess attitudes of consumers to rival products so as to know their brand’s vulnerable points.

(iii) To assess which ad concept is more effective out of the two developed.

2. Sources of Information :

We can collect our data from our internal records, library, directories, literature, etc. The list of getting such secondary data is long. When our research project needs more data, we will have to collect primary data. Primary data can be collected by our research department or by an outside research agency.

3. Analysis of Secondary Data :

This step consists in analyzing the secondary data to throw light on the problem on hand.

4. Identification of Sample :

When primary data is needed, we will have to decide from which group of people or organisations to collect it. It is our universe or population. If all members of the population are questioned for getting the data, it becomes census. This is rarely done.

It is too expensive and time-consuming. We can obtain reliable results by questioning only a portion of population called sample. The members who form this sample are our respondents or subjects.

The sample must be a representative of the overall population. A blood test is a good analogy. A sample to body’s blood drawn from finger in enough to tell about the blood in the entire body. The reason is that this finger blood is just like other blood in the body, i.e., it is a representative. Had it not been so, this sample would not work.

There are two categories of samples. Probability sample provides a chance of being included to all members of the population. Simple random sample is an example. Here, each member of population has an equal chance of being included in the sample.

Another probability sample is a stratified sample in which a population is put into several strata, e.g., doctors are put into GPs, specialists and surgeon’s categories. Then random samples are selected from each stratum. Cluster sample isolates cluster of people which resemble the overall population.

Non-probability sample does not give a chance of being included to all members of the population. A quota sample considers certain numbers of various subgroups in the population. Judgement samples select the members on the basis of researcher’s judgement of being appropriate. Convenience sample is chosen for the sheer convenience of interviewing.

In advertising, non-probability samples are generally used. It is not always possible to identify all the subjects of the entire population and then do random selection. Besides, for many problems, sample data need not be projected to the entire data population.

The quality of the research depends upon the selection of the sample. Sample selection needs grounding in statistical techniques.

5. Data Collection :

After identifying the sample, we begin to collect the data. Data can be collected either by a quantitative or a qualitative technique.

Quantitative data put responses in number and statistics. They answer questions like how many, how much and how often. Most common method of collecting quantitative data is by means of a survey of the sample conducted either personally or by mail or on telephone. In any survey, a questionnaire is administered. It is a list of questions that the respondents must answer.

The question can be dichotomous or yes-no type binary questions, or multiple choice questions or rating questions or open-ended questions. Instead of a survey, sometimes it is observed what people do to record data. It is called observation method. An experiment is the third method in which a hypothesis is tested by controlling variables.

Qualitative research looks for in-depth answers beyond the realm of quantitative research. It examines attitudes, motivations and behaviour. Mostly this research is exploratory. Depth interviews are used to allow people to open up and reveal their attitudes and opinions. Focus groups are a group of respondents who are subjected to probing questions. Direct questions are put to the members.

Projective techniques provide an opportunity to provide answers to vague questions by rationalizing. They project their feeling to objects and people. Some projective techniques are sentence completion and word association test, put words into cartoon balloons, picture drawing and Thematic Apperception Test (TAT). In TAT, the respon­dents are asked to react to a picture.

Though qualitative research has come to be used increasingly, it requires expertise and careful handling. Mostly quan­titative methods which are simple, are used.

6. Data Analysis and Result Presentation :

Whatever data we collect from the sample is not in a usable form. These data must be processed. They must be then analysed and interpreted. Several techniques are available for analysis of data. Tabulation is a useful technique at this stage.

Computers have helped a great deal in the analysis of data. Relationship between the data must be established to make them meaningful. Afterwards, we must present the research results. Generally, researchers and advertisers do not share a common vocabulary.

Advertisers do not have the technical background of the researchers. It is for this reason that the research results must be in plain English, devoid of jargon and complex statistical computations. The findings must be logical and concise.

Market Research – 5 Major Areas: Market, Product, Price, Promotion and Distribution

Marketing research is interested in five vital areas of market­ing:

2. Product,

4. Promotion, and

5. Distribution.

Market covers consumer/dealer research, competition and sales forecasting.

Promotion covers personal selling, advertising, sales promotion and public relations.

Distribution covers transport, ware-housing, order processing, Inventory control, and channel choice.

Marketing research offers active help in the evolution of optimum marketing mix. The following diagram depicts the role of marketing research, in all decision areas of marketing mix.

Marketing research is useful at four stages in the problem- solving process in any branch of marketing:

1. To identify and define the problem including causes,

2. To recommend reasonable and profitable solutions or an alternative course of action,

3. To determine most profitable and the best courses of action in order to solve our problem,

4. To test the feasibility of particular solution or course of action decided upon by marketing manager.

In an ever-changing market and national economy, marketing research acts as a powerful investigative arm of marketing manager.

1. Market research,

2. Sales research,

3. Product research,

4. Advertising and sales promotion research,

5. Research on sales methods and sales policies,

6. Dealers’ research,

7. Distribution research, and

8. Pricing research.

Marketing research can be useful at four stages in the problem solving process in any branch of marketing:

1. To identify and define the problem including causes.

2. To suggest reasonable and profitable alternative courses of action.

3. To determine most desirable alternative courses of action and to ensure optimum use of resources.

4. To test the feasibility of particular alternative course of action decided upon by manage­ment.

5. Distri­bution.

Market survey indicates information on consumer demand. Marketing mix consisting of 4 Ps indicates marketing offering and effort to serve the demand.

Market Research – Approaches  

The approaches to marketing research can be characterized by four procedures. The historical method involves the gathering of past data so that comparisons and contrasts can be drawn and predictions made. The observational method gathers data by direct measurement of consumer and market phenomena as it is going on.

The experimental method sets up experiments with proper con­trol procedures so that the effects of specific marketing actions can be determined. The survey method, which is perhaps the most widely used, gathers data by asking questions of knowledgeable informants usually selected by some sampling technique.

The procedure in any one investigation usually includes at least the following steps – A situation analysis is made to orient the research and develop hypotheses. The researcher makes a prelimi­nary investigation of the company, its products, the underlying channels of distribution, etc.

The informal investigation extends the preliminary search by informal conversations with people who have special knowledge of the company or industry. Definition of the problem with great precision is then necessary so that effort can be focused only on the important problem areas.

The formal inves­tigation is then planned very carefully so that time and money will not be wasted, and the proper data actually gathered. Data must be collected and analyzed, and this is really the heart of the proj­ect. Interpretations and recommendations must be made in a form and manner most useful for those who requested the study.

The most interesting and widely known part of marketing research is the consumer survey with its attendant questionnaires and sampling procedures. The premise underlying marketing sur­veys is that people generally can and will give information of value to marketers, provided no “leading questions” are asked, and that in other ways the approach will not give biased results.

For example, people will tell interviewers which products they use, when, where, and how much. If asked, they will also try to express preferences and reasons for them. If a new flavour is developed for a food product, potential consumers (a consumer panel) will try the new flavour, compare it to the old one, and express a preference.

Actually, data from panels of people continue to grow in importance. Just as the company can now ask on-line questions of its internal data, just so a panel can be queried continuously on its changing perceptions and behaviour. The data are especially valu­able as an early warning signal.

A growing problem with individual interviews is the growing reluctance of people to be interviewed. Even the Census finds it necessary to mount an extensive public relations campaign to elicit compliance. Marketing research interviewers have an even more difficult job imposing on people’s time and patience year after year.

The continuing problem is that many door-to-door sales presentations are couched initially in the guise of a survey. It is difficult for a genuine interviewer to establish credibility and elicit cooperation from people who have been thus betrayed.

Market Research – Basics

Doing your own market research isn’t difficult, although it does tend to be time consuming. If you own a small business, you’re probably researching your markets continually informally. Every time you talk to a customer about what he or she wants, or chat with a supplier or sales rep, you’re conducting market research.

The Market Research Grid shows the two types of data sources and the three areas of research that are important to any business. You need to gather information from and about your customers to focus your marketing efforts, maintain and improve your customer service, and to guide your efforts in developing new products and/or services.

Looking at the Market Research Grid, information gathered about the competition can help you determine what works and what hasn’t worked, give you ideas for improving your products and/or services, and provide insight into how to increase or shift your share of the market.

The environment section of the Market Research Grid refers to those economic, social, and political forces that shape business. Gathering information about the environment allows you to stay abreast of and respond to particular trends or events that impact your small business. Whether it’s a predicted drop in interest rates, or the closure of a local mill, you need to be aware of it and judge the ripple effect on your business, for good or ill.

Think of secondary data sources as market research data that’s already been collected by someone else. Telephone books, government publications, and sources such as Statistics Canada, trade journals, and surveys conducted by other companies are all examples of information that’s already been gathered that you can use to get a fix on what your customers want, what the competition has done, and what the environment is like.

Primary sources provide firsthand information. When you survey your customers or question the competition, you’re gathering information directly from the source. While this kind of market research data can be the most costly and time-consuming to gather, it can also be the most valuable, because it’s the most current and the most specific.

Market Research Grid :

i. Customer

ii. Competition

iii. Environment

iv. Secondary

Market Research – Primary Marketing Research

Primary marketing data are collected from consumers or customers usually on a sample basis. The stereotypical market research interviewer, standing on the street corner accosting passersby or walking the streets, clipboard in hand, knocking on closed doors, probably collects only a very small part of the data available to any organization. However, these are particularly important data, because they often provide the only true listening part of the dialogue with the consumer.

Suppliers of Primary Marketing Research :

Many organizations offer market research services, for only very large and sophisticated organizations will have the resources to handle all aspects of their own research.

These suppliers can offer two types of research to clients:

1. Syndicated research and

2. Custom research

1. Syndicated Research:

These suppliers usually offer the easiest and quick­est service and, typically, have ongoing or ad hoc research programs, the results of which they sell to a number of clients. Some of this can be standard research, such as the ACNielsen store audits that provide information on retail purchases by consumers. Shared cost is one advantage of such an approach, but the quality of the research is even more important.

Some research can be ad hoc in that a sup­plier (often one specializing in the industrial field) sees a topic that it believes will be of interest to a number of companies; it then conducts the research and sells the results off the shelf. Some researchers with ongoing programs (especially those conducting opinion polls) will sell space or, more accurately, interviewer time on the back of their omnibus surveys (discussed below), so that one or two simple questions will be asked of a large sample at a relatively low cost.

Apart from the ease and speed of obtaining the research information, the great advantage of all these approaches is usually cost. Because the overall cost is shared among a number of customers, the cost to any one client is that much lower. This allows research that few individual organizations could afford to carry out themselves. In most cases it is also quick and easy to organize and there­fore serves as a pilot for more complex studies.

The main types of syndicated research are retail audits, panel research, and omnibus surveys. Retail audits are one of the most sophisticated market research operations in terms of logistics. The concept, however, is simple. An auditor reg­ularly visits each retail outlet on the panel, which has been recruited randomly. The auditor carries out a physical stock check on the products being surveyed.

The change in stock from the previous visit (combined with the other stock move­ments, receipt of stock, and so on, which are obtained from the store’s records) gives the consumer sales.

Such retail audits are generally believed to offer the most accurate results of the volume of consumer sales and, in particular, of the value of such sales. These data are the main basis for brand-share calculations, for the all-important figures of price and distribution levels, and for the level of retailers’ stocks, which is often very important where supply management in response to promotions is a feature.

Panel research is another way to measure consumer behavior. At its best, this may approach the accuracy of retail audits, with the added advantage that it offers consumer profiles. These panels adopt a variety of techniques and cover a range of subjects. The two main approaches are the home audit and the diary method. In the home audit the panel member is required to save packaging in a special receptacle.

Once a week, an auditor checks the contents of the receptacle and the stocks of products in the house and asks the householder a short list of questions. This technique is particularly successful if respondents have a low attrition rate and provide long-term feedback. With the diary method the householder records the required information in a diary, which is collected by the interviewer (or, less successfully but more cheaply, returned by mail).

Both methods have, over long periods, been shown to provide accurate share data. Most importantly, these panels can show trend data, repeat purchasing, and brand-switching information, which are almost impossible to obtain when using other methods.

Omnibus surveys are very similar to ad hoc surveys, except that space on the questionnaire is “sublet” to different researchers, providing, in effect, their own mini survey. Omnibus surveys are often run on the back of ongoing research, such as political or opinion polls. The cost benefits can be significant, because field- work forms the major element of most market research costs.

Such surveys may also provide a faster turnaround of results, particularly if the survey is conducted by telephone. However, the questionnaire needs to be short, its questions cannot be complex, and the context may be unpredictable because the questions asked by the other researchers cannot be controlled. Such surveys can also be used to locate individuals belonging to target groups so that they can be followed up by con­ventional ad hoc surveys.

As computer ownership rises within the general population, it will also be more likely for respondents to participate in electronic research. Large cyber pan­els will make it easier to receive input from highly targeted populations, thus pro­viding better information at relatively lower cost. Given the rapid developments in technology, it may well be that electronic surveys and cyber panels become dominant forms of data collection.

2. Custom Research:

Custom research is the staple diet of the market research industry. The research organization is commissioned by a client to undertake a specific research task, and it accepts responsibility for all aspects of the research. There is usually quite a distinct split between organizations that specialize in the consumer fields—the province of the large random surveys—and those in the industrial field, where research often revolves around extended interviews with individual organizations.

There are also clear divisions between those involved in retail audits, those conducting questionnaire surveys on individual consumers, and those conducting group discussions or in-depth psychological interviews. In addition, many research firms concentrate mainly on the measurement of mar­keting performance—by investigating, for example, the effectiveness of adver­tisements. This latter form of research is growing quite rapidly, particularly because of the expansion of interactive media.

For example, Nielsen Media Research founded a joint venture with Internet Profiles in order to provide firms with information about individuals using the Internet to visit a World Wide Web home page. With the help of a profile card filled out by browsers, firms can then structure follow-up activities.

Within the market research community, firms often specialize in performing research subtasks. For example, an agency that has been commissioned by a client will typically plan and design the research itself but may appoint a subcontractor to provide the sample based on a specialist database, another organization to pretest the research, a further company to conduct the main series of interviews in the field, and yet another to analyze the results.

Market Research – Integration

The problems of integrating marketing research into a business organisation are of two kinds. The first group of problems are those associated with the difficulties or obstacles in the way of introducing marketing research into the company structure for the first time. The second group of problems are concerned with the difficulties of integrating the use and the results of marketing research into management thinking and planning.

Setting up a Marketing Research Department:

The first group problem is concerned with fitting marketing research into the organisation, developing awareness of what marketing research is and what it is able to do (and, equally important, what it cannot do) and communicating effectively with operating management. Generally speaking, fitting marketing research into the organisation will be easier in those companies which already have central marketing departments or are apply­ing the marketing concept in their day-to-day operations.

Under these circumstances, the role of marketing research will almost certainly have been discussed. Top management will have been exposed to such discussions and the need of research for planning purposes recognised. Therefore, the ground is likely to prove more fertile and the nature of the resistances to the setting up of a research department, at any rate, understood, if not overcome. Thereafter, the use to which marketing research is put will depend upon practical and measurable benefits of first and subsequent applications.

Selling the idea of marketing research to management will be more difficult in firms which have no marketing departments or to whom the application of the ‘marketing concept’ is something of a mystery. It is in such circumstances that the barriers to research go up as management and other executives see ‘all this marketing and research business’ as a potential threat to their security, status and authority.

People’s fear of the unfamiliar is perhaps the major obstacle—fear that they will be made redundant or moved to other and perhaps less congenial jobs within the firm, that their position and authority will be undermined by the slide-rule experts, that the change will be taken as a criticism of their past ways of operating and managing, that their functions will have to change and new modes of thought and techniques will have to be learnt, that their freedom of action and judgment will be curtailed and so on. These are all genuine fears and misgivings and will not disappear by being overlooked.

Executive acceptance and use of marketing research (and this applies to any management innovation) will be in direct propor­tion to how well they understand it, how it is likely to affect them, and the degree to which they are kept in the picture as to what is going on.

It is imperative that anyone connected with or likely to be affected by its operation and use should be so informed and have explained to them how it will benefit them and the company as it has benefited others. It is as well to recognise at the very outset that there will be a problem of communication regardless of whether there is a marketing-minded management or not.

Where top management is sold on the idea of marketing research but anticipates great difficulty in its introduction and application it is sometimes helpful to call on the services of consul­tants to determine whether and how a research department should be set up, what information it should provide, how it should be staffed and how it should be ‘presented’ to manage­ment and executive personnel. Some consultants are able to advise on the selection of research managers and executives and to prepare job descriptions and executive specifications.

Further­more, independent consultants are frequently able, by virtue of their wide experience of company research problems in divers fields and of the varying degrees of management sophistication in research, to recommend a marketing research set-up tailored to the particular needs of the company, bearing in mind such factors as the existing organisation structure, the type of products and markets with which the company deals, its methods of distribu­tion and selling, breadth of marketing perspective, and internal political factors.

They can arbitrate between what is the desirable ‘ideal’ and what is practically attainable. The advice one gets from those who do not exercise executive responsibility within a firm is necessarily but honorably different from that given by those who share or are affected by executive responsibility for decision and action.

The integration of a newly formed marketing research depart­ment is likely to be easier if it is under some form of central control, preferably a top or marketing management executive, who is sympathetic to its development within the company.

Not only will such an arrangement afford status and importance to the work undertaken by the department, but, being under the wing of senior management, it is more likely to be used on longer-range problems and applications of importance to senior management and, thereby, better able to prove itself during the early and, in many ways, most critical stages of its development.

The Closer Integration of Established Marketing Research Departments :

The second group of problems are concerned with the integra­tion of an already established marketing research operation into management thinking and planning so as to ensure smoother and more effective working cooperation between the marketing research department and other departments and operating divi­sions of the business.

The main problem areas are the same as those that must be faced when setting up a marketing research department for the first time, namely organisation obstacles, determining what management’s problems are and how market­ing research can best contribute to their solution and communicat­ing effectively with management.

Even in the most mature marketing organisations where major organisational defects appear to be absent and where marketing researchers work closely and continuously with management executives and, therefore, presumably know and understand their problems, the problem of communication remains. The problem is a two-way one.

On the one hand, there is the difficulty arising from the professional jargon used by many specialist research executives which other executives in the business do not under­stand and in terms of which they are not accustomed to thinking and talking. On the other hand, the research man, equally unfa­miliar with business management and accounting terminology, may be hard put to it to express himself clearly and convincingly in management language.

With the growing number of specialists engaged in business—economists, psychologists, sociologists, mathematicians, statisti­cians, operations research workers and so on—the problem of communication assumes new dimensions. The problems of put­ting these specialists to work effectively in the business world, of understanding how and when to employ their techniques and of coping with the flood of information they can make available, are now urgent.

How then can the communications gap be bridged and a com­mon language be developed that will enable these diverse activi­ties to be related and directed towards a common end? Meetings, training programmes, management and executive development schemes designed to familiarise people with the ever-increasing flow of new ideas and techniques for researching, planning and controlling business operations will help, of course, but it is not the whole answer to the problem.

Clearly, there is a growing need for Marketing Research Direc­tors and Managers to be generalists (to distinguish them from research specialists) with specific responsibility for:

1. Studying and learning about the resources of other intellec­tual disciplines which would be of assistance to general and marketing management.

2. Developing satisfactory working relationships and commu­nications between general and marketing management.

3. Developing a thorough appreciation of management prob­lems and to initiate and plan a programme of research that will help towards their solution.

4. Ensuring that the right internal and external technical spe­cialists are called into action, individually or as members of a team, at the most appropriate time and on the basis of a precise and agreed brief.

5. Liaising between general and marketing management and research technicians during the carrying out of the research programme.

6. Helping general and marketing management to understand research and its uses, its strengths and its limitations.

7. Preparing budgets for and controlling the costs of the total company marketing research effort including the purchase of external services.

The discipline of money applies with no less force to marketing research as to any other business activity. Hence, the research budget is the main instrument of control. The Marketing Director or Manager must estimate what scale of research effort is required to meet the company’s needs and must seek approval of his esti­mates. In this, he must usually allow for the costs of unplanned or unexpected projects.

It is advisable for management to allocate a definite budget for a programme of research providing for future needs, first, to ensure that research costs do not exceed a certain authorised amount, and second, to avoid having to justify costs on a day-to-day basis. Most research cannot be justified on such a basis—it may be some while before the return on a research pro­gramme is realised and it may not even be measurable in financial terms.

Buying outside research services is no different from buying any other product or service externally The onus is on the buyer either to prepare a job or product specification which the contract­ing supplier undertakes to meet at a specified cost or to accept the supplier’s quotation based on his own specification of the job to be done.

Once the contract has been signed, the specification should only be changed by written agreement by both parties. Complete mutual confidence is necessary if the work is to be brought to a successful conclusion.

As a leading industrial marketing researcher has commented – ‘Unless the marketing research agency is aware of the purpose behind the research—particularly in the complex field of indus­trial marketing research—it cannot contribute to the identification of the buyer’s real, as opposed to apparent, problems’.

In the pursuit of research, much more material is acquired than is subse­quently used. If the marketing researcher is not a confidant of management, he can unwittingly throw out the baby with the bath-water by not being aware of the relevance of some of the information he has obtained.

Market Research – Acceptance  

Marketing research has been accepted by the majority of large corporations, advertising agencies, and media. This is indicated by the rapid growth in formal departments, numbers and quality of people involved and relative increase in status.

The marketing research operation is organized in many ways in such companies. Almost all large consumer goods companies have large, formally organized departments. These developed earlier and tend to be larger, more frequently found, and more sophisticated than in industrial goods companies.

In smaller companies of both types, the activity is often restricted to one or two persons, often attached to the sales man­ager, and in very small companies it may be a part-time activity of an inadequately trained person.

Some of the larger and more diversified research departments are in advertising agencies. There may be 100 or more persons including a director, manager, research account executives (research liaison and planning), plus functional departments for economic analysis, survey planning and administration, print media TV and radio research, copy research, motivation research and operations research, plus communications, public relations, and sales consultants.

Most media—magazines, newspapers, TV and radio net­works—have extensive marketing and media research depart­ments.

While it is not yet predominant, the most logical organizational and reporting structure for marketing research is as a staff func­tion reporting to the marketing manager. Under this concept the Marketing Research Department is co-equal to Advertising. Sales Promotion, Sales Management. New Product Development, Pric­ing, Distribution, and any other marketing functions. Reporting to the marketing manager, marketing research is the eyes and ears of all other marketing functions and can work effectively in helping them all.

If, as is still common, it is organized as part of one other market­ing function—Sales, for example—its role is often restricted to that function’s work, and it is not used at all by other marketing functions. A good general reporting principle is that marketing research should be independent from but available to any other marketing function.

On a less formally documented plane, however, acceptance is not so real, and very serious problems exist. Crash programs are probably still the norm as against systematic, long-range planning of research. Often, research results are not accepted if they conflict with marketing experience and judgment. There is serious contro­versy over the extent to which research inhibits reactivity. In too many cases research is used as a status symbol, rather than as a marketing tool.

The future, however, looks relatively bright. It is probable that as marketing becomes more of a science than an art, depending more on long-range planning than intuition, marketing research will achieve high status and full integration.

Market Research – Evaluating the Benefits

Marketing research requires both time and money—two typically scarce com­modities. To make a justifiable case for allocating resources to research, manage­ment must understand what the value of the research will be. It should clearly aid management in improving the decision making process and thus should aim at managerial rather than statistical significance. At the same time, market research should be recognized as a tool and not a substitute for judgment.

Enough of the “right” information is never obtained within the time constraints to dictate the action or course to follow. However, research will help avoid gross errors and compensate for inadequate experience or unreliable intuition.

The value of research can be assessed from two perspectives. One approach analyzes the benefits the firm receives from research; the other identifies the downside risk that the firm incurs if it does not carry out research.

The context of the decision under consideration must be evaluated when determining the extent and expense of research. The value of a decision with the benefit of research should be greater than the value of the same decision without research by an amount exceeding the cost of the research. In addition, the firm needs to have adequate resources to act on the insights gained by the research. Otherwise, the findings will not contribute to the decision-making process, and the research would be a waste of resources.

Often, however, researchers neglect to assess this cost-benefit relationship, particularly when the individual risks and benefits are difficult to quantify (which frequently happens). If insufficient attention is paid to the outcome of research and its cost, the firm risks conducting either too much or insufficient research.

Using a cost-benefit justification for research, however, may place the researcher at risk, because once the research is carried out, the actual benefits are measurable and can be compared with the anticipated ones. If the benefits do not materialize, the researcher may be charged with having inappropriately inflated the benefit expectations.

The Risks of Inadequate Research :

As an alternative to the benefit strategy, the researcher can construct “what if’ scenarios that outline the risks the company may incur by operating without suf­ficient information. Such risks might include a loss of market penetration effec­tiveness or creation of ill will that precludes any further expansion. In the long run, this justification is easier for the researcher to use than the benefit formula, because he or she can point out that some of the worst-case scenarios have not materialized.

Market Research – Issues

Among the more important controversies in the field today are the following:

Should marketing researchers simply report the facts or should they go further and make marketing recommendations? The gen­eral tendency is toward the latter role, and with the further devel­opment of the research “generalist,” who understands both research and marketing, more extensive involvement in market­ing planning will probably develop.

Who should pay for marketing research—advertisers or adver­tising agencies? This problem becomes more acute as agencies offer more collateral services and become more marketing ori­ented. At present there is no general solution, but more and more advertising agencies are performing comprehensive research on a fee basis.

Should advertising agencies do research at all? This problem is perhaps most acute when it involves advertising effectiveness studies. The problem is complex and involves, as negatives, possi­ble bias, sloppy work, and extra costs, as against the positives of deep product knowledge, research sophistication, and enlight­ened self-interest.

Qualitative vs. quantitative research? This problem became acute with the development of motivation research, which makes extensive use of the social sciences, such as sociology, psychology, and anthropology, in finding out how and why people react to products and advertising, and which in the beginning made little use of more accepted sampling techniques. The problem is less acute now as the qualitative and quantitative approaches resolve their differences and in many respects enrich each other.

One extreme form of quantification is the application of man­agement science techniques to marketing management. Indepen­dent operations research firms may set up and manage computer­ized customized marketing models. Or a small number of opera­tions research people, in a rather uneasy, even hostile, relationship to the regular marketing research department, may be employed by the firm as a separate unit.

Whatever the manner of interaction, the estrangement and lack of communication between the two groups can be painful for all concerned. Usually, the estrangement develops when it becomes known that an operations research group has been called in to work on a project, notwithstanding excellent planning, field work, analysis, interpretation, and practi­cal recommendations for marketing action on the part of the mar­keting research personnel.

At the same time, it soon becomes obvious that the operations research group is setting up total business or marketing models, based on continuing discussions with top management, and is monitoring the allocation of resources and measuring results on a continuing basis. In effect it is managing by giving specific, continuing advice on what to do, when, and the probable consequences.

Top management has become used to such systems working miracles in production, refinery, distribution, and logistics prob­lems, and expects to see similar results in the more esoteric realms of marketing. Reasonable progress has indeed been made in some of the more mechanical areas of marketing, e.g., media allocation and sales effort allocation.

Less progress has been made in such areas as the measurement of specific results of certain kinds of creativity in advertising communications. Whether such opera­tions research activity is marketing research or is not depends upon definition. Nevertheless, it is always a critical decision for a firm as to how to conceptualize and integrate orthodox, well executed marketing research with its more exotic cousin.

Whenever the company is not as large or sophisticated as to have such applications of operations research and models, it will probably resort to more obviously articulated, almost common-sense, “what if” or “what is the relationship of,” kinds of questions to be answered from internally generated data. What if we col­lapsed this sales district with that – what if we reduced our promo­tional effort on that line; or combined this product with that, or added a new flavour?

Continuous monitoring of sales, especially at the retail level, is another example of greatly expanded speed and capacity. Virtu­ally instantaneous retrieval of data from computer systems allows almost continuous access to sales by category and brand and almost immediate remedy of problems. Most of these studies are simple enough in principle and practice so that most executives can understand and participate fully rather than be made uneasy and alienated.

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What Is a Market?

How markets work, regulating markets, the bottom line, market: what it means in economics, types, and common features.

A market is a place where parties can gather to facilitate the exchange of goods and services. The parties involved are usually buyers and sellers. The market may be physical, like a retail outlet, where people meet face-to-face, or virtual, like an online market, where there is no physical presence or contact between buyers and sellers.

Some key characteristics help define a market, including the availability of an arena, buyers and sellers, and a commodity that can be purchased and sold.

Key Takeaways

• A market is where buyers and sellers can meet to facilitate the exchange or transaction of goods and services.
• Markets can be physical, like a retail outlet, or virtual, like an e-retailer.
• Examples include illegal markets, auction markets, and financial markets.
• Markets establish the prices of goods and services, determined by supply and demand.
• Features of a market include the availability of an arena, buyers and sellers, and a commodity.

Investopedia / Candra Huff

A market is any place where two or more parties can meet to engage in an economic transaction—even those that don't involve legal tender . A market transaction may include goods, services, information, currency, or any combination that passes from one party to another. In short, markets are arenas in which buyers and sellers can gather and interact.

Two parties are generally needed to make a trade. However, a third party is required to introduce competition and balance the market. As such, a market in a state of perfect competition , among other things, is characterized by a high number of active buyers and sellers.

Beyond this broad definition, the term market encompasses various things, depending on the context. For instance, it may refer to the stock market, which is the place where securities are traded. It may also describe a collection of people who wish to buy a specific product or service in a particular place, such as the Brooklyn housing market . Or it could refer to an industry or business sector, such as the global diamond market.

Certain decisions that help shape the market are determined by an economic system known as the market economy . In this system, factors like investments and the production, distribution, and pricing of goods and services are led by supply and demand from businesses and individuals. As such, a market economy is unplanned and is not part of a planned or command economy where the government dictates all of these factors. Examples of market economies include the United States, Canada, the United Kingdom, and Japan.

The Securities and Exchange Commission (SEC) regulates the stock, bond, and currency markets in the United States. It puts provisions in place to prevent fraud while ensuring traders and investors have the right information to make the most informed decisions possible.

Supply and Demand

Whatever the context, a market establishes the prices for goods and other services. These rates are determined by supply and demand . The idea of supply and demand is one of the very basics of economics. The sellers create supply, while buyers generate demand.

Markets try to find some balance in price when supply and demand are in balance. But that balance can be disrupted by factors other than price, including incomes , expectations, technology, the cost of production, and the number of buyers and sellers participating.

Simply put, the number of goods and services available is determined by what people want and how eager they are to buy. Sellers increase production when buyers demand more goods and services. Producers tend to raise their prices when demand increases. When buyer demand decreases, they drop their prices and, therefore, the number of goods and services they bring to market.

Physical and Virtual Markets

Markets may be represented by physical locations where transactions are made. These include retail stores and similar businesses that sell individual items to wholesale markets selling goods to distributors. Or they may be virtual. Internet-based stores and auction sites such as Amazon and eBay are examples of markets where transactions can occur entirely online, and the parties involved never physically connect.

Markets may emerge organically or as a means of enabling ownership rights over goods, services, and information. When on a national or more specific regional level, markets may often be categorized as developed or developing. This distinction depends on many factors, including income levels and the nation or region’s openness to foreign trade .

The size of a market is determined by the number of buyers and sellers and the amount of money that changes hands each year.

Features of a Market

Certain features help define a market and are necessary for it to function. The following are the most basic characteristics that shape a market:

• Arena: This is the platform where transactions are conducted between buyers and sellers. Keep in mind that this doesn't necessarily mean a physical location.
• Buyers and Sellers: For the market to function, there must be buyers and sellers. The market can't exist if someone isn't buying something that someone else is selling. These entities can be businesses, individuals, or even governments, and they can execute their transactions physically or virtually, thanks to the internet.
• One Commodity: A single market depends on a single commodity, so a related commodity must be present for a market to operate. For instance, wheat is the commodity bought and sold in the wheat market. Electronics make up the electronics market en masse but can be broken down into subcategories.

Other features include competition, pricing, and the freedom to buy and sell goods and services.

Types of Markets

Markets vary widely for several reasons, including the kinds of products sold, location, duration, and size. The constituency of the customer base, size, legality, and other factors are equally influential. Aside from the two most common markets—physical and virtual—there are other kinds of markets where parties can gather to execute their transactions.

Underground Market

An underground or black market  refers to an illegal market where transactions occur without the knowledge of the government or other regulatory agencies. Many illegal markets exist to circumvent existing tax laws . This is why many involve cash-only transactions or non-traceable forms of currency, making them harder to track.

Many illegal markets exist in economically developing countries with planned or command economies where the government controls the production and distribution of goods and services. When there is a shortage of specific goods and services in the economy, members of the illegal market step in and fill the void.

Illegal markets can also exist in developed economies. These shadow markets , as they're also known, become prevalent when prices control the sale of specific products or services, especially when demand is high. Ticket scalping is one example of an illegal or shadow market. When demand for concert or theater tickets is high, scalpers will step in, buy a bunch, and sell them at inflated prices on the underground market.

Auction Market

An auction market brings many people together for the sale and purchase of specific lots of goods. The buyers or bidders try to top each other for the purchase price. The items for sale go to the highest bidder.

The most common auction markets involve livestock, foreclosed homes, and art and antiques. Many operate online now. For example, the U.S. Treasury sells its bonds, notes, and bills via regular auctions.

Financial Market

The blanket term "financial market" refers to any place where securities , currencies, and bonds are traded between two parties. These markets are the basis of capitalist societies , providing capital formation and liquidity for businesses. They can be physical or virtual.

The financial market includes the stock exchanges such as the New York Stock Exchange (NYSE), Nasdaq , the London Stock Exchange (LSE), and the TMX Group . Other financial markets include the bond and foreign exchange markets, where people trade currencies.

Other than underground markets, most markets are subject to rules and regulations set by governing body that determines the market’s nature. This may be the case when the regulation is as wide-reaching and as widely recognized as an international trade agreement or as local and temporary as a pop-up street market where vendors maintain order and rules among themselves.

How Do Markets Work?

Markets are arenas in which buyers and sellers can gather and interact. A high number of active buyers and sellers characterizes a market in a state of perfect competition. The market establishes the prices for goods and other services. These rates are determined by supply and demand. The sellers create supply, while buyers generate demand. Markets try to find some balance in price when supply and demand are in balance.

What Is a Black Market?

A black market refers to an illegal exchange or marketplace where transactions occur without the knowledge or oversight of officials or regulatory agencies. They tend to spring up when there is a shortage of specific goods and services in an economy or when supply and prices are state-controlled. Transactions tend to be undocumented and cash-only, all the better to be untraceable.

How Are Markets Regulated?

Most markets are subject to rules and regulations set by a regional or governing body that determines the market’s nature. They can be international, national, or local authorities.

Markets are an important part of the economy. They allow a space where governments, businesses, and individuals can buy and sell their goods and services. But that's not all. They help determine the pricing of goods and services and inject much-needed liquidity into the economy.

By offering a place to conduct transactions, markets allow entities access to the capital to further their interests, whether to fund infrastructure, fulfill growth plans, make purchases, or invest their money. This helps fuel innovation to secure a competitive edge in the marketplace.

TreasuryDirect. " Auctions ."

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market research

Definition of market research

Examples of market research in a sentence.

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'market research.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

1920, in the meaning defined above

Dictionary Entries Near market research

market price

market-ripe

Cite this Entry

“Market research.” Merriam-Webster.com Dictionary , Merriam-Webster, https://www.merriam-webster.com/dictionary/market%20research. Accessed 29 Mar. 2024.

More from Merriam-Webster on market research

Britannica.com: Encyclopedia article about market research

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