Market Research Basics
Market research is the process of determining the viability of a new product or service through research conducted directly with potential customers. It is a critical component in rolling out a new product or service, and enables a company to zero in on its target market and get the opinions and feedback of consumers.
Effective market research empowers businesses to make insight-driven and informed decisions to create a profitable marketing strategy. For businesses that are entering new territory, market research helps to mitigate business risks by finding out exactly what customers want. More importantly, it allows business owners to evaluate the financial feasibility of the business before committing resources to them.
Market research can be conducted in-house or via a third-party that specialises in market research. Market research can be done through surveys, interviews, focus groups and case studies.
There are two types of market research: primary and secondary research.
Primary market research
Primary market research comprises information about the target market and can be exploratory or specific. This information can be compiled directly by the business or third party hired to do so.
Exploratory research is open-ended and helps the business define a specific problem. It usually involves detailed, unstructured interviews with a small group of respondents.
On the other hand, specific research is precise in scope and used to solve a problem identified by exploratory research. Questions are structured and formal in approach.
Primary market research includes surveys, interviews, focus groups and case studies.
In-person surveys are one-on-one interviews typically conducted in high-traffic locations such as shopping malls. They allow people to be presented with samples of products, packaging or advertising and provide ther immediate feedback. Less expensive than in-person surveys are telephone surveys, however, fewer people are willing to participate in them due to relentless telemarketing. Online surveys are a good alternative as they are a simple, inexpensive way to collect anecdotal evidence and gather customer opinions and preferences.
Personal interviews, usually lasting an hour, pose unstructured, open-ended questions to participants. Typically recorded, these interviews may yield valuable insights into customer attitudes and are an excellent way to uncover issues related to new products or service development. An interview also allows the researcher to delve deeper and ask follow-up questions.
Focus groups usually consist of small numbers of people that fit the profile of the target market. In focus groups, a moderator uses a scripted series of questions or topics to lead a group discussion. A session usually lasts one to two hours, and it takes at least three different focus groups to get a more balanced and less biased set of results.
Case studies provide a comprehensive understanding of how an individual interacts with a product or service. It gives a more complete picture of a consumer’s satisfaction, usage and attitudes towards a specific product, service or industry in the appropriate context.
Secondary market research
Secondary market research draws on publicly available information from industry and trade associations, labour unions, media sources and potential industry competitors. Other resources include government documents and white papers, public sources, commercial sources and educational institutions.
These sources are publicly available and mostly free. Government department websites are one of the best public data sources. Business collections of public libraries may also be able to provide industry statistics and other business-related information. Some reports and papers by research organisations and think tanks are also available in the public domain.
These are valuable sources of information that usually involve a subscription fee to access. Commercial sources include reports and papers by market research companies, business think tanks, trade associations, banks and other financial institutions.
Industry and market research conducted by universities and polytechnics can be also be valuable sources of data for businesses.
Entrepreneur. (2021). “Market Research”. https://www.entrepreneur.com/encyclopedia/market-research
Twin, Alexandra. “Market Research”. Last updated 28 September 28, 2020. https://www.investopedia.com/terms/m/market-research.asp
British Library Business & IP Centre. “What is Market Research?”. Accessed June 22, 2021. https://www.bl.uk/business-and-ip-centre/articles/what-is-market-research