What Is Market Research?
Market research refers to a business strategy wherein an organization analyzes the market trends, competition, and consumer preferences ahead of launching new products or services. It involves collecting and interpreting data during product development or marketing to help businesses make informed decisions.
The research process includes getting feedback from existing and potential customers through surveys and interviews to understand the demand for a specific product type. Besides introducing new products, many organizations do this to identify the target market when planning to launch a new business. Either a business can choose to do it by itself or hire a third-party company for the job. Its purpose is to give them a competitive advantage in the industry.
- The market research definition refers to gathering market and consumer data by a business to make informed decisions about launching its new products and services.
- It requires a business to set up an in-house research and developmentResearch And DevelopmentResearch and Development is an actual pre-planned investigation to gain new scientific or technical knowledge that can be converted into a scheme or formulation for manufacturing/supply/trading, resulting in a business advantage. division or hire a third-party firm to evaluate how its products or services will perform post-launch.
- The steps involved in conducting research include – defining the problem, deciding the approach, preparing a research design, collecting and analyzing data, and drafting a research report for presentation.
- Two types of marketing research are primary research (exploratory and specific) and secondary research through online, public, and commercial resources.
How To Do Market Research?
Knowing target consumer interests, market demand, and competition is essential for a business before rolling out new products or services or upgrading the existing ones. The process of gaining all this information is known as market research. For this, the business sets up an in-house research and development segment, appoints a market research analyst, or takes the services of a third-party firm. The product differentiation and market segmentation allow them to devise an effective marketing strategy.
Most of the time, businesses trust their instincts when it comes to launching their products successfully. But this is not always the case. The results could be harsh enough to show how their beliefs can go wrong.
Before going into the market research methods, let us understand what makes the process so important for businesses.
- It helps businesses understand the target market and implement product development and marketing strategies accordingly.
- The research ensures that the soon-to-be-launched product or service will meet the market demand and consumer requirements.
- It helps firms become customer-centric by narrowing down customer segments.
- The research allows businesses to study the performance of products from their competitors.
- It gives an idea of how better the sales would be and how profitable the production would prove.
Market Research Process
Marketing research involves gathering data from different sources to identify market trends and consumer behavior. It then analyzes and interprets the collected data to develop innovative products, offer unique services, or launch new businesses. The process is an essential part of business strategy and helps in decision-making. It usually involves the following steps:
#1 – Defining The Problem
Identifying issues or defining problems that consumers face with existing products or services is the first step. The research and development team should prepare questionnaires directed at those issues for respondents to find the optimum solution.
#2 – Deciding An Approach
The business must define an approach to study consumer behavior and market trends correctly. It can include everything from establishing analytical models for a research design to defining research objectives and hypotheses.
#3 – Preparing A Research Design
Next, the business should outline the process and the goal that the research intends to achieve. Starting with data collection and ending with data analysis, the research design should cover it all.
#4 – Collecting Data
It is the most critical aspect of marketing research as results would be as accurate as the data collected. A business can use online surveys, emails with questions, one-to-one interviews, and so on to get feedback from customers.
#5 – Analyzing Data
The data collected must be analyzed to understand how the market and consumers will react to soon-to-be-released products.
#6 – Drafting Reports
The business needs to draft the final research report for presentation based on the data collection and analysis. It would help investors and top management create an effective business plan for future products.
Let us consider the below-mentioned market research examples to understand the concept better.
Shelly distributed her handmade soaps to friends and relatives to get feedback and decide whether to sell her products. She received a tremendous response from them but decided to do a little more research.
She ran a poll on her social media accounts to check how many people would prefer handmade soap. Simultaneously, she read reviews for similar products on e-commerce websites. It helped her understand what customers want.
After the marketing research, she found that people seem satisfied with handmade soaps but only if the packaging is eco-friendly. Hence, Shelly opted to focus on packaging design while considering market viability and consumer behavior.
First Book, a non-profit social enterprise, has set up the First Book Research & Insights research division to understand the significance of human-centered design in the social sector. It aims to conduct marketing research to gain insights on promoting educational equity by removing barriers to learning.
The data includes feedback from educators from under-resourced schools and programs across the United States that support underserved children ages 0-18. Academics, organizations, and curriculum developers use this data for developing strategies and providing human-centered design solutions to benefit underserved children.
Types of Market Research
Businesses gather information from publicly available sources or through surveys, feedback, etc. After analyzing the data, they can evaluate whether to introduce new products. Based on the sources available, the process of marketing research can be of two types:
#1 – Primary Research
When businesses interact with consumers directly or via a third-party firm, it becomes their primary data source. In this case, they do not rely on third-party or publicly available resources. Instead, they create their data to understand consumer requirements and market trends. This type of research exists in two phases – Exploratory and Specific.
- Exploratory Research – It involves preparing open-ended questionnaires to identify the problems faced by consumers. It helps in the launch of new products or upgrade of existing ones.
- Specific Research – It aims to find solutions to problems identified in the exploratory research. Besides, it explores opportunities based on customer needs and market trends.
Primary research comprises the following data collection methods:
- Handing out a questionnaire or creating an online poll to collect feedback from customers
- Conducting surveys via phone, Internet, or in-person about the existing and soon-to-be-launched products
- Interacting with focus group remotely through online surveys or in-person
- Doing telephonic, online, or one-on-one in-depth interviews
#2 – Secondary Research
This type of marketing research entails data collection from publicly accessible resources, either online or offline. For online research, analysts can use various tools to find trending keywords and focus on them when promoting products or services on virtual platforms. The keyword research provides insight into the types of products that customers want.
The online/offline methods that comprise the secondary research include:
- Accessing sources like articles, newspapers, magazines, journals, and social media
- Using census data, report, and studies from the government
- Referring to trade association research reports, academic papers, literature reviews, and case studies
Frequently Asked Questions (FAQs)
Marketing research is a part of marketing strategy enabling a business to analyze market trends and understand consumer requirements before introducing new products or services. It follows a data-driven approach to make an informed decision.
Conducting market research is essential as it lets businesses evaluate how their products will perform post-launch. A well-prepared research report guarantees successful product launch and performance. It saves both their precious time and money while giving them a competitive advantage in the respective industry.
Marketing research involves gathering information about relevant target markets and consumers. The collection of data relies on the resources available either online or offline. Interacting with customers directly through various mediums or referring to publicly available resources are more common methods.
This has been a guide to What is Market Research and its definition. Here we discuss how to do the market research and process along with examples & types. You may also have a look at the following articles to learn more –