Market research is a key tool for businesses to understand their customers and make informed decisions. In this article, we’ll cover the basics of market research, how to do it effectively, different methods you can use, and provide real-life examples to illustrate its importance.
In this blog post, we will discuss expertise to explain market research matters, explore various research methods, and offer tips on how to apply them to your own business.
What is market research?
In simple terms, market research is when businesses check if a new product or service is a good idea by talking to potential customers to get their opinions. This helps businesses see who might like their product and what people think about it. They can do this research themselves or hire experts to help. They use surveys and group discussions to gather important information. Sometimes, participants in the research get free samples or a small payment as a reward.
How Market Research Works
Market research is important for determining if a new product or service will be successful. It helps businesses improve the product and create a solid launch plan. One key aspect of market research is understanding the potential customers of the product, which aids in advertising and making the product stand out.
During market research, businesses conduct various tasks to study the market in which the product will be sold. They collect and analyze information to gain valuable insights. These insights assist in product development and in deciding how to target the right audience.
Market research plays a vital role in the research and development (R&D) phase of creating a new product. It can be conducted through surveys, product testing, interviews, and group discussions. These methods help companies gather and interpret information, enabling them to make informed decisions during the product development and marketing processes.
Primary Market Research vs. Secondary Market Research
Market research usually consists of a combination of:
- Primary research, gathered by the company or by an outside company that it hires
- Secondary research, which draws on external sources of data
Primary Market Research
Primary research can be categorized into two main types: exploratory research and specific research.
- Exploratory research uses flexible methods like focus groups, phone interviews, and surveys to explore questions about a product being developed. Its main goal is to find and solve important issues related to the product.
- In-depth research aims to thoroughly explore and understand the problems or issues found during initial research.
Secondary Market Research
Studying the market is crucial for knowing what customers want and like. In the digital era, we have access to a wealth of online information. Secondary research involves using various sources such as government data, reports from trade groups, survey findings, and studies from companies in the same field.
History of Market Research
Market research began as a formal practice in Germany in the 1920s and gained popularity in the United States during the Golden Age of Radio. Advertisers for radio shows started studying the preferences of listeners, such as music lovers and comedy fans. This was a shift from earlier advertising approaches that focused on reaching a broad audience through billboards and magazines. With radio, advertisers could tailor their messages to specific consumer groups, like rural or urban dwellers, teenagers, or families. They could then assess the effectiveness of their targeted campaigns by analyzing sales data.
Types of Market Research
Face-to-Face Interviews
Market research companies used to ask people on the street about their favorite newspapers and magazines and which brands they remembered seeing advertised in them. They would then check how many copies of these publications were sold to see if the ads worked. Nowadays, market research has evolved to include surveys, which build upon these older methods.
Focus Groups
A focus group is a group of people who are selected to share their opinions about a product or advertisement. They are asked to talk about the product, the company’s brand, or similar products from other companies. The company then uses this feedback to decide whether to launch the product, make any changes to it, or discontinue it.
Phone Research
Interviewing methods have evolved over time. In the past, researchers would talk to people in person on the street for information. Nowadays, phone interviews have become popular, making data collection easier and more cost-effective. Phone interviews have been a preferred method for market researchers due to time and cost savings. However, there are challenges with phone interviews as fewer people use landline phones and prefer cell phones, which are not ideal for research purposes.
Survey Research
Sending surveys instead of having face-to-face meetings in focus groups is a cheaper way to find out what consumers think. By mailing surveys and offering coupons or vouchers, people are more likely to respond. This research method helps us learn consumers’ opinions on the product, brand, and price, and assists in market analysis.