How to Do Market Research, Types, and Example
Understanding Market Research
Market research is defined as the act of assessing a new product or service’s market potential by engaging directly with prospective buyers. This enables a business to identify its primary audience and collect consumer feedback and perceptions regarding their interest in the service or product offered.
This research can be carried out internally or outsourced to an external agency specializing in market research, utilizing methods such as focus groups and surveys. Participants in these studies often receive compensation in the form of product samples or a nominal payment for their participation.
Key Insights
- Market research is undertaken by companies before the launch of new products to gauge interest among potential buyers.
- Methodologies employed include surveys, focus groups, and telephonic interviews.
- Insights from market research guide the product’s final design and its market positioning strategy.
- Typically, market research involves the collection of primary data directly from the target audience and secondary data from existing sources.
How Market Research is done
Market research plays a pivotal role in assessing the market potential of new products or services. The insights derived are crucial for refining product designs and adjusting launch strategies. This process aids in identifying market segments and contributes to the customization of advertising through product differentiation.
Businesses undertake a series of steps in the market research process, collecting specific information relevant to the product’s target market sector. The analysis of this information and the interpretation of key data points help in formulating strategies for the product’s optimal design and market introduction tailored to the intended consumer segment.
This stage is vital during the research and development (R&D) period for the introduction of new offerings. Various methodologies, such as surveys, product trials, interviews, and focus groups, are utilized in market research.
Market research serves as an essential instrument for companies to grasp consumer preferences, innovate products accordingly, and secure a competitive edge within their industry.
Comparison Between Primary and Secondary Market Research
Market research typically encompasses two main types:
- Primary Research: Conducted internally or by a contracted external agency.
- Secondary Research: Utilizes data from pre-existing sources.
Primary Market Research
Primary research is categorized into exploratory and specific types:
- Exploratory Research: This form is more open-ended, utilizing questions in focus groups, telephonic interviews, or surveys to unearth broad issues or inquiries related to a product under development.
- Specific Research: This type probes deeper into the issues or questions raised during the exploratory phase.
Secondary Market Research
Secondary research leverages the investigative work done by others on consumer needs and preferences. This information is increasingly accessible online and may include demographic data from government censuses, studies from trade associations, polling data, and insights from competitors within the same industry.
Historical Context of Market Research
The formal practice of market research originated in 1920s Germany and gained prominence in the United States with the rise of radio broadcasting.
Advertisers seized the opportunity to understand their audience demographics better through the listenership of radio shows, including dramas, music, and comedy. This marked a shift from general advertising strategies, like billboards or magazine ads, to more targeted approaches that considered the listener’s background, enabling advertisers to tailor their messages to specific audience segments based on the sales feedback received.
Varieties of Market Research Methods
Face-to-Face Interviews
Initially, market research entailed conducting street interviews to inquire about individuals’ reading habits and their recall of advertisements and brands featured in newspapers and magazines. The effectiveness of these ads was then evaluated by comparing the collected data to the publication’s circulation figures, laying the groundwork for modern market research and survey methodologies.
Understanding the dynamics of your market requires insights into demand, market size, economic indicators, geographic location, market saturation, and pricing strategies.
Focus Groups
A focus group involves a select number of consumers who are asked to use a product or view an advertisement. Feedback is then gathered on their perceptions of the product, the brand, or how it compares to competitors. This feedback informs company decisions on product release, modifications, or discontinuation.
Telephone Research
The traditional street interview evolved into telephone interviews, allowing researchers to gather data more efficiently and cost-effectively. While telephone surveys were once a staple in market research, the decline of landline usage and the rise of mobile phones have posed new challenges for this method.
Survey Research
Surveys offer an economical alternative to focus groups by enabling the assessment of consumer attitudes without direct interviews. Typically, surveys are distributed through mail, often accompanied by incentives like coupons or vouchers, to encourage participation. This method provides insights into consumer perceptions of products, brands, and pricing.
Online Market Research
The digital age has significantly shifted market research practices online. Unlike traditional methods that require finding participants in public places or through cold calls, online research allows individuals to voluntarily sign up and participate in surveys at their convenience. This shift makes the research process less intrusive and more flexible, accommodating participants’ schedules and preferences.
Steps to Conducting Market Research
Initiating successful market research begins with establishing the objectives of the investigation. Each study should aim to resolve a specific, well-articulated issue, such as determining consumer preferences, assessing brand awareness, or evaluating the effectiveness of various advertising strategies.
Subsequently, it’s crucial to identify the participants of the study. Given the costly nature of market research, it is imperative for a company to efficiently allocate resources and avoid gathering superfluous information. Decisions should be made early on regarding the demographic segments to be included in the study and the methodologies for data collection while also considering the potential for statistical inaccuracies or biases.
Following this, the stage of data collection and analysis comes into play. With the preliminary steps diligently executed, this phase ought to proceed smoothly. Researchers will compile the findings, documenting key demographic details of participants such as age and gender. The compiled data is then scrutinized in a report that elucidates the study’s findings.
The final phase involves the application of insights derived from the market research by the company’s decision-makers. Based on the research outcomes, adjustments may be made to target a new consumer segment, modify pricing strategies, or alter product features.
These modifications are subject to evaluation in subsequent rounds of market research, thus perpetuating the cycle of continuous improvement and adaptation.
Market Research Benefits
Market research plays a crucial role in fostering brand loyalty and enhancing customer satisfaction. Given that not every product will resonate with all consumers, an effective market research strategy is key to pinpointing the specific demographics and market segments most inclined to engage with a product.
Additionally, market research is pivotal in refining a company’s marketing strategies. For instance, should market research reveal a preference among its customer base for Facebook over X (previously known as Twitter), a company can direct its advertising efforts to the more favored platform. Similarly, if the target audience is found to prioritize value over price, efforts can be concentrated on enhancing the product’s quality instead of lowering its price.
The success of market research hinges on the honesty and willingness of participants to share their true opinions and experiences.
Market Research in Practice
Numerous businesses leverage market research to explore new product ideas or gather consumer insights on unmet needs within the market.
Take, for instance, a company contemplating the launch of a new venture; market research can be utilized to assess the potential success of its proposed product or service. Confirmation of consumer interest through market research enables the company to move forward with its plans with greater assurance. Conversely, should the research indicate a lack of consumer interest, the company has the opportunity to tweak its offering to better align with customer preferences.
Key Varieties of Market Research
Market research can be broadly categorized into primary and secondary research. Primary research methods encompass focus groups, polls, and surveys, directly engaging with the target audience to gather fresh data. On the other hand, secondary research draws upon existing information found in academic articles, infographics, and white papers.
Within these categories, research can further be divided into qualitative and quantitative approaches. Qualitative research delves into the attitudes, feelings, and motivations of customers, offering deep insights into consumer behavior. Quantitative research, conversely, relies on numerical data and statistics, such as website traffic, social media activity, and subscription rates, to draw conclusions about consumer trends.
Exploring Online Market Research
Online market research adapts traditional methodologies for the digital age, conducting studies over the internet. This approach might involve inviting potential customers to complete surveys or provide feedback on products online, assisting researchers in profiling potential market segments or consumer preferences.
Understanding Paid Market Research Surveys
Paid market research compensates participants for their involvement in studies. This compensation can take the form of financial rewards or incentives such as discount vouchers, in exchange for their time spent completing surveys or participating in focus groups.
The Essence of a Market Study
A market study offers a comprehensive examination of the demand for a specific product or service, analyzing various factors that impact this demand. These factors include the product’s pricing, its placement in the market, the competitive landscape, available alternatives, and broader economic conditions that may affect its acceptance and success in the marketplace.
Top Market Research Companies in 2024
Quick market research tools offer rapid insights for immediate needs. However, for more tailored or detailed data, employing a market research firm can be invaluable.
The insights garnered by a market research firm can significantly enhance various aspects of your business, including product marketing, communication strategies, customer service, and the online user journey.
Offering everything from customized services to specialized analysis on subjects crucial to your target market, these leading market research agencies provide a range of solutions for both B2B and B2C enterprises.
Top Big Market Research Companies in 2024
Kantar delivers comprehensive market research services across various B2C sectors, such as consumer packaged goods (CPG), fashion, hospitality, retail, and technology, catering to a wide array of industry needs.
2. Ipsos
Ipsos specializes in connecting businesses with online communities, offering insights and data through digital platforms to enhance business strategies.
3. Gartner
Gartner provides market research services similar to Ipsos but extends its expertise to additional sectors, including education, energy, and finance, offering broader industry coverage.
Top Small Market Research Companies in 2024
Enäks distinguishes itself in the market research and marketing consultancy field by supporting SMEs worldwide. Offering high-quality research and consultancy services at competitive prices, Enäks customizes its services to meet the specific lifecycle stage needs of each SME, providing tailored solutions that address their immediate requirements.
2. Bauman Research & Consulting, LLC
As a full-service market research and consulting firm, Bauman Research & Consulting, LLC excels in both qualitative and quantitative research, focusing on branding, positioning, and concept testing, and boasts expertise in moderating.
3. Dynata
Dynata stands as a leading global provider of first-party data sourced directly from consumers and business professionals, offering invaluable insights for market research.
Conclusion
Market research stands as a crucial phase in the research and development (R&D) process for new products, enabling companies to gauge the potential success and market fit of their innovations before a full-scale launch. It equips businesses with the insights needed to make informed decisions, potentially steering the development process towards more favorable outcomes in the real market environment.
