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What is market research?
Market research as a subject is playing a lead role in framing the marketing practice including advertising, distribution and selling. The anticipation of the customer’s need is being discovered by market research. Market research has influenced marketing ideas along with economics, social sciences, psychology, advertising etc.
Market research is increasingly becoming an area of market specialisation. In market research there is a method known as the qualitative research. It gives out more exploratory and subjective output. It gives out a complete picture of the competitors and customers. It involves setting up focus groups and in depth interviews. On the other hand the quantitative research provides an organisation with solid statistics. It is of an unbiased, objective and formal form. It is something like a questionnaire which has a yes or no option to it, but basically gives out some digestible facts about the market.
What are the essentials of market research?
While performing market research, an organisation needs to understand the market segmentation and its trend. Segmentation is the study of how the market or population is being divided into the subgroups with similar motivations. The differentiating factors include the demographic differences, geographic differences, personality differences, psychographic differences and the use of product differences. Market trend means the movements of the market in a specific duration of time. The movements can be downward, upward or static and each trend can be divided into secular trends (long-term), secondary trends (short-term), and the primary trends. It is based out of the idea that the marketing cycle works with regular persistence.
Sometimes the markets can be bearish or bullish, meaning the downwards and the upwards movement of the prices respectively (especially the prices of the stocks, bonds in financial markets). But it is sometimes pretty hard to predict the prices of the products when they don’t follow any trends. Also it is very difficult to figure out the size of the market if a very specific or a new product is being launched. It may be that the potential customers or customers segments can help figure out the market size in such cases.
Besides all these, there is also a need to know who the competitors are. To make the market research and the marketing process a success there are methods like competitor analysis, choice modelling, advertising the research, marketing mix modelling and risk analysis which are followed in the industry.
What are the basic types of market research?
Primary and secondary research – the fundamental division of any research practice. Primary research relates to custom or original research, which means the gathering of information from its original sources. This is normally private information from a client that is not available to the marketplace.
Secondary research – compiling of information from published or existing sources. The sources can be either external or internal. The external would be the searches from published information, such as trade publications or newspapers etc, and internal are customer’s databases or historical files etc.
Qualitative research – tries to tap into a person’s creativity and how a person feels and addresses the emotional issues, i.e. how people feel about certain issues.
Quantitative – based on logic or reason and defines the magnitude of responses, i.e. how strongly a person feels about certain issues.
When a study is planned or a consultant needs to define its objectives, a consultant must firstly determine which method suits the research, either qualitative or quantitative. At times, only one method may be needed, but for others, they may both be needed. Once the most appropriate method has been determined the most effective methodology must then be chosen. Some examples of these are:
Qualitative methods – advisory panels; focus groups; mini groups; face to face personal, in-depth interviews; paired in-depth interviews.
Quantitative methods – telephone interviews; mail surveys; on-line sources; real time interviews; electronic surveys.
What are the advantages and disadvantages of market research?
Market research has several advantages to its name, such as the relevant and specific information on a product, which are up to date. It has several disadvantages as well, such as the time taken for the process, the cost involved and the need for a large sample size. Most companies today focus on the needs of the customers and then launch their product. The surveys and the questionnaires from market research will reflect what the market orientation is like. The company should then decide its focus on the products it wants to launch into the market. This customer driven approach can be helpful in identifying the changes to the market.
Why should market research be performed?
These are some situations where the use of market research can add value to business success. They are listed below:
Allows an organisation to understand exactly what a customer expects of their organisation and how well a product or service is being delivered.
To determine the viability of new markets that an organisation can enter.
To identify the risk that poses the greatest threats to a business.
To estimate market share/size/adoption rate for business planning and investments.
To identify new product and/or service opportunities.
The root cause analysis for any customer defections or lost business.
To understand how customers perceive an organisations market positioning compared to competitors.
To determine the most effective advertising channels and marketing that can support a business.
To identify the most profitable segments of an organisation and ways in which to product them.
To identify bundle opportunities and develop right price points.
Performing SWOT intelligence on leading competitors and the planning of business strategies.
When does market research need to be performed?
There are trigger points and scenarios that can tell an organisation when it is time to perform market research:
An organisation senses that there are problems with partners, investors, customers, suppliers or distributors.
There are business issues that need to be addressed urgently.
An organisation is not sure why they are losing business to its competitors.
Divestiture planning or due diligence for M&A needs to be performed.
Individuals or groups within an organisation cannot recognise a problem in existence and independent validation is needed.
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