What is market research?
Market research is the process of collecting data to ensure that a company is meeting the needs of their customers. It is the process of gathering and analyzing raw data, and procuring usable business information from it.
Through market research, businesses can gain insight into:
1. Target audience, their needs and wants, and their spending patterns
2. How to make their product more appealing
3. Which geographies have the optimal sales potential
4. Who would be their business rivals in aforementioned geographies
5. What are the best distribution channels for the company
6. Current market trends based on economic shifts and chosen demographics
There are two basic ways of obtaining this information:
1. Primary: Primary research is research conducted by a company based on their specific needs and regarding specific decisions. By directly reaching out to consumers and stores, companies can keep a check on sales effectiveness, existing business practices, and quality of services.
2. Secondary: Secondary research is the collection of data from sources like government census or other projects, or even someone else’s primary research. By collecting and analyzing data that has already been published, a company can create effective strategies to propel their business, such as which are the best market segments to target for a particular product.
Together, they help conduct consumer, trade, and social research.
Consumer research: It is the part of market research through which one can gain information about the consumers’ preferences, motivation, and buying behavior. It can be obtained through primary sources like surveys and interviews, or secondary sources like demographic data.
Trade research: It is the part of market research which informs companies and helps them make decisions about new international ventures, as it reduces the chances of using wrong information before entering a market.
Social research: It is mainly a systematic investigation used to find social phenomena or issues that affect a market. It is mainly done through primary research channels such as surveys or interviews.
Market research is all about objectivity and gaining insight through inquiry, and making an informed decision. It involves a systematic process of gaining the information:
1. Identification of problem
2. Collection of data through chosen methods
3. Analysis of said data
4. Evaluation of information
Qualitative Vs. Quantitative Data
Qualitative data helps understand the motivations and perceptions of customers, and to uncover market trends or customer behavior patterns. It is used to gain a basic understanding and develop a strong foundation for further exploration. Data collection methods include interviews, discussions, or mystery shopping.
Quantitative data is all about quantifying data and getting results from a sample population. It is used to gain statistical data and get conclusive findings, which are then used to take a course of action regarding current business practices. Data collection methods include interviews over the telephone or in-person, and (online) questionnaires.
Why Market Research
Importance Of Market Research
As the market gets increasingly competitive, market research helps companies maintain an edge. By understanding and catering to their customers and taking note of how the market environment affects their business, companies can elevate their position in the market, making them future-oriented.
Why You Need Market Research
Market research is an integral part of any business because it helps understand the factors affecting business, and how to make these factors work in their favor. Here is how market research can help you make the best decisions for your business:
1) It can help identify the problem areas in your business.
2) It understands the needs of existing customers
a) It helps you figure out why they chose your business over your competitors’.
b) It helps you figure out why they chose your competitors over you.
3) It keeps track of market trends, and can even help predict how the market may change.
4) It figures out new areas for expansion and thus helps in increasing your customer base.
The purpose of research is to answer questions and gain knowledge.
Through market research, you can discover potential customers and what their needs and wants could be. This helps set targets and develop strategies for product development, growth of the business, and sales and marketing.
Getting your marketing (of product, price, promotion, and place) wrong can end your business. Market research will also ensure the success of a company’s marketing campaign. By identifying the interests and aims of customers, along with their behavior and spending patterns, companies can develop a marketing strategy that targets the same, thus increasing sales.
For example, Lays’ “Do Us a Flavor” contest brought together the best of both worlds — delicious potato chips and interesting choices of flavor from consumers. This increased brand awareness, connected the brand with their customers, and informed the brand as to which flavors found popularity in certain regions.
Risks and losses can be minimized by researching the target audience’s expectations of the brand and adhering to the same. By referring to early adopters before the launch of a product, companies can recognize any potential flaws or problems and fix the same. This ensures that the product launched in the market is innovative with an impact.
Case Study: Febreze
A highly interesting example of a company using market research to improve sales and market position, and one which is worth learning from, is that of Febreze.
When Febreze was first introduced into the market, it was marketed as an odor-removing spray. Trying to market the product in that way only led to a further decline in sales. Through market research (face-to-face interviews), the company was able to understand that residents were desensitized to the odors in their house. The interview of a regular Febreze user revealed that she didn’t use it to eliminate smells, but instead used a couple of sprays once she had finished cleaning a room.
This lead to the understanding that Febreze could be marketed as a sort of reward for cleaning up. By making the formula smell good, P&G could market it in such a way that if a user used it while cleaning, the fresh odor would give the user an affirmation (“reward”) that the room was indeed clean.
By marketing and positioning their product in such a fashion, Febreze managed to double its sales, and a year later (in 1999), Febreze’s revenue was $230 million.
Market research is an extremely vital part of business strategy. With the increasing amount of focus on market research, it is understood that without market research, the chances of failure in business is higher. Market research provides stability and direction. It reveals how a business can sustain its growth trajectory while retaining (and even gaining) customers.
By indulging in market research, businesses can put forth the best versions of their products, and further improve on existing products. They can also look at the economic landscape of their targeted market segment, do price research, and price their products in a way that not only retains existing customers but also attracts new ones.
To keep a business alive, the customers need to be satisfied. Without customers, there is no business. Based on the needs of the target audience, brands can reposition their image and reach a sort of compromise by maintaining and upholding their values, but also altering themselves to satisfy consumers.