Market Research - Explained
What is Market Research?
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Table of ContentsWhat is Market Research?Quantitative and Qualitative Primary Market ResearchWhat is the Marketing Research ProcessWhy Is Market Research Valuable?Two Basic Types of Market Research
What is Market Research?
Market research regards learning about your customers. Specifically, market research is identifying the needs and wants of your target customer, scope business operations to meet those needs, the manner in which to reach the customer with your offering, and broadening your product or service to include other prospective customers.
Business owners and entrepreneurs acquire information through marketing research that helps identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve the understanding of marketing as a process.
What is the Marketing Research Process
The marketing research process generally proceeds as follows:
- Define the Problem
- Assess Informational Needs
- Collect Data
- Analyze the Data
- Make Recommendations
Quantitative and Qualitative Primary Market Research
Primary research is split into two categories: quantitative and qualitative. Quantitative research provides hard numbers to some of the questions above. For example, it should give you a baseline of the number of potential customers in a given product market, the number of potential markets, etc. Qualitative Research deals less with hard numbers and addresses more of the preferences among identified customer segments. This research method relies greatly on soft data, such as conversations and customer opinions.
What is the Quantitative and Qualitative Research Process?
Start by defining the purpose and scope of the intended research? Have a concrete idea in your head about the problem or issue you are trying to solve.
In the initial market research phase, it may be very general (such as determine the preference of a certain product). However, you should subdivide your objective as much as possible. The more specific you can make the issue or question you are trying to answer, the more useful and reliable your results will be.
Next, identify the sources of data where you can retrieve the information. Remember you will want to test as broad of a sample base as possible. The pool of individuals that you test should be relevant to the geographic area or market you intend to serve. Remember, you do not always have to do things yourself. There are often places where you can purchase collected data and research.
You will then need to develop a reliable method for collecting the data. Examples of data collection sources is questionnaires, surveys, conducting or purchasing third party observational research.If you are using a survey or questionnaire, you will need to spend considerable time identifying questions that will provide answers to your objectives. The questions should be specific and use vocabulary that any potential customer can readily understand. The questions should not be too long, in order to avoid the bias of frustration in completing a long form. The meaning of each question should be clear and unambiguous at the first reading. The questions should also be as relevant as possible to the issues your are trying to address without becoming pointed or biased. The hard part in this situation is to draft questions that are not biased or influence the individual answering the question toward an answer. Better said, the questions would be completely neutral and free of self-serving influence.
Lastly, you will need to categorize the characteristics or demographics of the individuals taking the survey. This is the only manner to match customer preference with identifiable customer demographics. Often, potential customers will be reluctant to provide this information, as some of the information can be sensitive to the customer. At a bare minimum, you need to identify the age, race, gender, geographic area, and socio-economic status of the potential customer. Other information, such as education level, ethnicity, marital status, children's age, etc., may be helpful.
Analyzing the Data
Data analysis can be a very difficult task. Remember your purpose. You are trying to take the customer demographics and preferences and translate that into meaningful information that allows you to meet the customers demand preferences. The primary way of using the data is through statistical software. You will have to determine the relationship between the individual data points. This is generally done by carrying out simple statistical analysis. Explaining how to use simple business statistical techniques is beyond the scope of this post, but examples of such techniques include:
- Chi-square test f
- The t-test
Note: You can learn more about these statistical methods through various youtube channels.
The result of your statistical analysis should summarize the findings in a way where you can answer the issues or objective questions. These will form the basis of your decision to either pursue or forgo a potential market opportunity.
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Why Is Market Research Valuable?
Marketing research can help small businesses determine the following:
- What are the demographics of your potential customer base? (Age, race, ethnicity, community or belief association, socio-economic status, etc.)
- Where is your potential customer base located?
- How may people within a given area meet those demographics?
- What is the level of urgency (level of need or want) for the product among the potential customers?
- To what extent will your product or service meet that specific customer demand?
- Are there other businesses already serving these customers?
- How well do these competitors meet the customers level of demand?
- Does any competitor have a competitive advantage over other businesses in meeting the customer demand?
- Do you have a competitive advantage in meeting the customer demand? That cannot be replicated? That cannot be outdone?
The above questions are just examples of the type of information you will want to understand in evaluating the value proposition or potential of a product, service, or idea to be a profitable entrepreneurial venture.
Two Basic Types of Market Research
The two basic types of marketing research are Primary and Secondary Research. Secondary Research involves using data or information from third parties to make an assessment about the characteristics of the market. Primary research involves assembling information and resources oneself to determine the market characteristics.
How Market Research Is Conducted There are different ways in which a business can carry out market research. This includes:
- Customer surveys: This includes conducting research by meeting with customers face-to-face and do the interview online or through phone calls. Business usually provides a short simple questionnaire about a product or service which customers are supposed to respond to.
- Web-savvy businesses: They use their online channels to conduct market research. The most common online channel is websites and social media where customers are encouraged to give feedback about their products and services. A simple and short questionnaire is provided on the website for customers to respond. To ensure the effectiveness of using online research, it needs to be mobile-friendly (usable on mobile devices). Social media may include Facebook, Twitter, LinkedIn, and so on.
- Products Trials: This is where a company decides to provide a few samples of their new products to customers in real settings. Then from customers feedback, you are able to gauge the effectiveness of the products. Based on the results, you can either change or improve on the product or service to increase value to customers.
- Focus groups: This is where group sessions are organized and people are mobilized so that they can participate in question and answer or a topic on specific service or product. However, the focus group method may be expensive, especially for businesses that are just starting over (small businesses).
- Direct Observation: This method involves recording video on customer behavior or purchase patterns or directly watching customers. It is important to note that privacy requires that you conduct in a public setting if not, the person being recorded need to be informed about the recording. Although it gives you the exact customers behavior, it is, on the other hand, consumes a lot of time.
- Marketing Research Overview
- Quantitative and Qualitative Research
- Primary Research
- Secondary Research
- Determining the Right Marketing Strategy
- What is a Marketing Information System?
- What are Decision Support Systems?
- What are Marketing Models?
- What is a Marketing Dashboard?
- What Kinds of Data can we Use?
- Methods of Collecting Data
- What are Focus Groups?
- What is Group Think?
- What are Scanner Data?
- What is Web Tracking?
- What is Ethnography?
- What is Experimental` Research?
- What is Use of Statistics
- What Distorts the Results of Marketing Research?
- Challenges of International Market Research?