Market research is defined as the process of evaluating the feasibility of a new product or service through research conducted directly with potential consumers.
This method allows an organization or enterprise to discover its target market, collect and record opinions, and make informed decisions.
Market research can be conducted directly by the organization or company, or it can be outsourced to an agent with expertise in the process.
The process of market research can be accomplished by deploying surveys, interacting with a group of people also known as samples, conducting interviews and other similar processes.
The main purpose of market research is to understand or examine the market related to a particular product or service in order to determine the audience’s response to the product or service.
The information obtained from conducting market research can be used to customize marketing/advertising campaigns or to determine consumer functional priority/service requirements (if any).
Types of Market Research: Market Research Methods and Examples
Whether an organization or a business wants to understand the purchase behavior of consumers, or the possibility that consumers are willing to pay a certain cost for a certain product, market research can help draw meaningful conclusions.
According to the required methods and tools, the types are as follows:
1. Primary market research
Combination of qualitative research and quantitative research: Primary market research is a process in which an organization or enterprise contacts end users or hires a third party to conduct related research to collect data.
The data collected can be qualitative data (non-digital data) or quantitative data (digital or statistical data).
When conducting major market research, two types of information can be collected: exploratory information and specific information. Exploratory research is open-ended.
Questions are explored by asking open-ended questions in the form of detailed interviews (usually a small group of people, also called samples).
Here, the sample size is limited to 6-10 members. On the other hand, more specific research is targeted and used to solve the problems found in exploratory research.
As mentioned earlier, the main market research is a combination of qualitative market research and quantitative market research.
Qualitative market research involves semi-structured or unstructured data collected through some common qualitative research methods, such as:
Focus group: Focus group is one of the commonly used qualitative research methods. A focus group is a small group of people (6-10) who usually respond to online surveys sent to them.
The best part about focus groups is that information can be collected remotely without having to personally interact with group members. However, this is a more expensive method because it is used to collect complex information.
One-to-one interviews: As the name suggests, this method involves personal interaction in the form of interviews. Researchers ask a series of questions to collect information or data about the interviewee.
These questions are mostly open-ended questions and are asked in a way that facilitates answers. This method largely depends on the interviewer’s ability and experience in asking questions.
Ethnographic research: This in-depth research is conducted in the natural environment of the interviewee. This method requires the interviewer to adapt himself to the interviewee’s natural environment, which may be a city or a remote village.
Geographical constraints may be an obstacle to conducting such research. Ethnographic research can last from a few days to several years.
Organizations use qualitative research methods to conduct structured market research by using online surveys, questionnaires, and public opinion surveys to obtain statistical insights to make informed decisions.
This method was once performed with pen and paper. It has now evolved into sending structured online surveys to respondents to gain actionable insights.
Researchers tend to use modern and technology-oriented survey platforms to construct and design surveys to elicit the greatest response from respondents.
With a well-structured mechanism, data can be collected and reported easily, and necessary measures can be taken on all information obtained firsthand.
2. Secondary market research:
Secondary research uses information organized by external resources (such as government agencies, media, chambers of commerce, etc.).
The information is published in newspapers, magazines, books, company websites, free government and non-governmental organizations, etc. Secondary sources utilize the following:
Public resources: Public resources like libraries are a great way to collect free information. Government libraries usually provide services for free, and researchers can record available information.
Commercial sources: Although commercial sources are reliable, they are expensive. Local newspapers, magazines, periodicals, and television media are important commercial channels for collecting information.
Educational institutions: Although not a very popular source of information collection, most universities and educational institutions are a rich source of information because there are more research projects carried out there than in any industry.
Why is Market Research Important?
With the ever-changing economic competition, it is very important for companies to understand and understand their consumer preferences.
Conducting research is one of the best ways to gain customer satisfaction, reduce customer churn and improve business. The following are reasons why market research is important and should not be ignored:
It provides information and opportunities about the value of existing and new products, thereby helping companies to make corresponding plans and strategies.
It helps to determine the needs and needs of customers. Marketing is customer-centric, and understanding customers and their needs will help companies design products or services that best suit them.
By understanding the needs of customers, companies can also predict their production and sales. For production managers, one of the most difficult aspects is keeping inventory piled up.
What are the requirements and how much should be produced to meet customer needs? Market research helps determine the best inventory.
Ahead of competitors, market research is an important tool for comparative research. Companies can develop business strategies that can help them stay ahead.
Steps for conducting Market Research
Knowing what to do in various situations that arise during the investigation will save researchers time and reduce problems.
Today’s successful companies use powerful market research software to help them conduct comprehensive research on a unified platform, so as to provide feasible insights faster with fewer questions.
Step #1: Define the Problem
Clearly defining research topics will help researchers ask questions. These problems should be solved directly and must be adjusted according to the project.
Make sure that the question is written clearly and understood by the interviewee. Researchers can test with a small group of people to see if these questions will understand if the questions asked are understandable and if they are sufficient to obtain insightful results.
Research objectives should be written in a precise manner and should include a short description of the information needed and how it was obtained. They should have an answer to this question: “Why should we conduct research?”
Step #2: Define the Sample
In order to conduct market research, researchers need a representative sample that can be collected using one of many sampling techniques. The representative sample is a minority, and they reflect the larger population as accurately as possible.
Organizations cannot waste resources to gather information from the wrong people. It is important that in the selected sample, the population represents the characteristics that are important to the researcher and need to be studied.
Considering that marketers are always prone to fall into prejudice in the sample, because there will always be some people who do not answer the survey or the answer is incomplete because they are busy, so the researcher may not be able to obtain the required data.
Regarding the sample size, the larger it is, the more likely it is to represent the population. A larger representative sample allows researchers to be more certain that the people included are the people they need, and they can reduce bias.
Therefore, if they want to avoid inaccuracies in our survey, they should have a representative and balanced sample. In fact, all carefully considered surveys are based on scientific sampling, based on statistics and probability theory.
There are two ways to obtain a representative sample:
Probability sampling: In probability sampling, samples are randomly selected, which can ensure that each member of the population has the same selection and inclusion probability in the sample group.
Researchers should ensure that they have the latest information about the population so that they can draw samples and investigate the majority to establish representativeness.
Non-probability sampling: In non-probability sampling, different types of people are seeking a more balanced representative sample. Knowing the demographic characteristics of our group will undoubtedly help limit the profile of the required sample and define variables of interest to the researcher, such as gender, age, residence, etc.
By understanding these conditions, researchers can control the creation of representative samples that are effective for us before obtaining information.
If the sample is not representative, there may be errors. If researchers want a representative sample of 100 employees, they should choose a similar number of men and women.
Sample size is very important, but accuracy cannot be guaranteed. The representativeness is not limited to the size, but is also related to the sampling frame, that is, to the list of people from which to choose, for example, part of a survey.
If researchers want to continue to expand their knowledge of how to determine sample size, please consult our sample guide here.
Step #3: Carry out data collection
First, a data collection tool should be developed. The fact that they did not answer the survey or answered incompletely can lead to research errors. Correct data collection will prevent this.
Step #4: Analyze the results
Every aspect of the market research process is interconnected. If all the above operations are performed well, but the results are not accurately analyzed, then the decision made will be inappropriate.
Performing in-depth analysis without sparing any effort will effectively obtain a solution. The data analysis will be recorded in the report, which should also be clearly stated so that effective decisions can be made on this basis.
Analyzing and interpreting the results is to find a broader meaning for the data obtained. All previous stages have been developed to this point. How do researchers measure the results obtained?
The only quantitative data available are age, gender, occupation and the number of respondents, because the rest are the emotions and experiences that the interlocutor conveys to us.
For this reason, there is a tool called an empathy map, which forces us to put ourselves in the position of our customers, hoping to be able to truly identify the needs or interests of our products or services.
When the study is carefully planned, the hypothesis is fully defined and the indicated collection method is used, it can usually be explained easily and successfully. What happens after market research?
Step #5: Make the Research Report
When presenting the results, researchers should focus on: what they hope to achieve with this research report, and when answering this question, they should not assume that the structure of the survey is the best method for analysis.
A major mistake many researchers make is that they submit reports in the order of the questions, but they don’t see the potential for storytelling.
In order to make a good report, the best analysts give the following advice: follow the inverted pyramid to present the results, and answer the business-essential questions that cause the investigation at the beginning.
Start with conclusions and give them a basis instead of accumulating evidence. Afterwards, researchers can provide detailed information to readers who have time and interest.
Step #6: Make Decisions
Organizations or researchers should never ask “Why market research?”, they should do it! Market research can help researchers understand a variety of information, such as consumers’ purchasing intentions, or provide feedback on the growth of the target market.
They can also discover valuable information that will help estimate the price of their products or services and find a balance point that will benefit them and consumers.
Take decisions! Act and implement.