Market Research: Definition, Methods, and Types

Market Research

Do you want to know why, how, and when to apply market research? Do you want to know why your customers don’t buy your products? Are you interested in launching a new product, service, or even a new marketing campaign, but not sure what your customers want?

To answer the above questions, you need help from your customers. But how are you going to collect this data? In this case and many other situations in your business, market research is the way to get all the answers you need.

In this definitive guide to market research, you will find the definition, benefits, types of market research, and some examples that will help you understand this type of research. Don’t forget to download the free ebook at the end of this guide!

Definition:

Market research is defined as the process of evaluating the viability of a new product or service through surveys carried out directly among potential consumers. This method allows organizations or companies to discover their target market, gather and document opinions, and make informed decisions.

Market research can be carried out directly by organizations or companies, or it can be outsourced to agencies specializing in this area.

The market research process can be carried out through surveys, interaction with a group of people known as a sample, conducting interviews, and other similar processes.

The main purpose of conducting market research is to understand or research the market for a specific product or service to decide how the public will react to a product or service. Information obtained through conducting market research can be used to customize marketing/advertising activities or to determine priorities for consumer resources/service requirements (if any).

Three main objectives of market research

A market research project can generally have three different types of goals.

  1. Administrative: assisting in the development of a company or enterprise through proper planning, organization, and management of human and material resources, to meet all the specific needs of the market at the right time.
  2. Social: meeting specific customer needs through a requested product or service. The product or service must meet the customer’s requirements and preferences when consumed.
  3. Economic: determines the degree of economic success or failure that a company can have when new in the market, or when offering new products or services, thus providing certainty about all actions to be taken.

Why is market research important?

Taking surveys is one of the best ways to achieve customer satisfaction, reduce negative customer reactions, and increase sales. Here are the reasons why market research is important and should be considered in any business:

  • Valuable information: Provides information and opportunities about the value of existing and new products, helping companies to plan and strategize right.
  • Customer Oriented: Helps determine what customers need and want. Marketing is customer-centric, and understanding customers and their needs will help companies design products or services that are best for them.
  • Forecast: By understanding customer needs, companies can also forecast production and sales. The market research also helps to determine the ideal stock of stock.
  • Competitive advantage: to keep up with the competition, market research is an important tool for conducting comparative studies. Companies can devise business strategies that can help them keep up with their competitors.

Types of Market Research: Market Research Methods

Whether an organization or business wants to know consumer buying behavior or the likelihood that consumers will pay a certain price for a product, market research helps to draw meaningful conclusions.

Depending on the methods and tools required, the types are as follows:

  1. Primary market research (a combination of qualitative and quantitative research): Primary market research is a process in which organizations or companies contact end-users or contract third parties to research data collection. The data collected can be qualitative data (non-numeric data) or quantitative data (numerical or statistical data).

When doing primary market research, you can gather two types of information: exploratory and specific. Exploratory research is open-ended, exploring a problem by asking open-ended questions in a detailed interview format, usually with a small group of people, known as a sample. Here, the sample size is limited to 6 to 10 members. Specific research, on the other hand, is more accurate and serves to solve the problems identified by exploratory research.

  1. Secondary market research: Secondary research uses information organized by external sources such as government agencies, media, chambers of commerce, etc. This information is published in newspapers, magazines, free books, on the company’s website, governmental and non-governmental agencies, and so on. The secondary source uses the following:

Public resources: Public resources such as libraries are a great way to collect information for free. State libraries generally offer free services and a researcher can document the available information.

Commercial resources: Commercial resources are expensive, yet reliable. Newspapers, magazines, newspapers, and local television stations are excellent commercial sources for gathering information.

Educational Institutions: While not a very popular source of information, most universities and educational institutions are rich sources of information as more research projects are conducted than in any industry sector.

Why does every business need market research?

Market research is one of the most effective ways to understand your customer base, competitors, and the market in general. The purpose of market research is to provide your company with the information it needs to make informed decisions.

This is especially important when small businesses are trying to determine whether a new business idea is viable, entering a new market, or introducing a new product or service. Read below to learn more about how market research can help small businesses.

COMPETITION: According to a Business Insider study, 72% of small businesses are focused on increasing revenue. By conducting surveys, companies help to understand the behavior of competitors. By knowing your competitor’s strengths and weaknesses, you can learn how to position your product or offer. To be successful, small businesses need to understand what products and services their competitors are offering and what their price range is.