If you work in marketing, then you may have come across market research as a key activity in marketing planning. But what exactly is it, and why do businesses of all sizes need to spend time investing in this activity?
What is market research?
Firstly, let’s look at the fundamentals in answering the question ‘what is market research?’ The term describes the systematic collection of data about areas in which businesses are interested, typically:
- Target markets
- The broader competitive landscape
- Competitors operating within their industry
That data needs to be gathered, evaluated and then interpreted to provide insights that are useful for decision making. Market research underpins all marketing and business activities and it can be used for a variety of purposes; from launching a marketing campaign through to identifying a potential new market to enter. Because of its role, market research occurs at the beginning of any marketing activity; providing research and background data that helps business decision-makers to weigh up their best course of action or direction of travel.
What are the benefits of market research?
Done correctly, market research can be carried out to help:
- Business owners make more informed and better decisions (those which see a stronger return on their investment)
- Allow decision-makers to focus their resources towards initiatives that are likely to have the strongest potential
- Remove guess-work from innovation
- Prevent costly mistakes.
For example, market research could be used in any of these scenarios:
To ascertain the feasibility of a new product, service or even business. If demand exists and there are few barriers to entry, this could be a good prospect.
- To evaluate a market as a whole and see whether a market of interest holds potential for entry.
- To monitor emerging market trends and to understand how to respond to the changing curve; for example where market conditions change or when new technologies enter the mix.
- To test consumer demand, either for fresh products entirely or for enhanced product features on an augmented product.
- To work out how a new product or service should be positioned in the market, considering the 7 Ps of the marketing mix.
- To keep innovating and improving the business, flagging up potential issues as they occur so that they can be tackled as early as possible.
- To ensure that promotional campaigns are as successful as possible.
So how can businesses carry out market research?
There are two categories of market research; primary and secondary. Primary research involves engaging with research sources directly; for example, you might run a bespoke customer survey to collect a unique set of information first hand. Secondary research involves doing desk research to interrogate existing information sources to find trends or insights. This is a highly valuable form of research in its own right. Because secondary research is cheaper to carry out than primary research, it tends to be done first as part of a viability study. Then, businesses will see if there are any gaps and carry out their own research to fill these in.
Within these two categories, both quantitative and qualitative research exist. The former is data-led and objective. The second provides insights that round-out the findings of quantitative market research data. For example, a qualitative study could be used to find out consumer opinions or brand awareness. Quantitative research tends to be carried out via secondary research and qualitative via primary research (unless published studies with qualitative – valid – outcomes exist).
Methods of carrying out market research
There are various ways of conducting primary market research, all of which have their pros and cons.
- Customer surveys can be managed in various ways – from online to in-person. These can be specific or broad.
- In-depth or focus interviews allow probing questions and follow-up queries to be asked.
- Observations are used for product development, for example.
Secondary research can be carried out easily using a variety of publications and existing sources. For example, trade journals, subscription data sites, government sources, industry statistics, news websites and public records can be interrogated. Primary research is usually delivered by a specialist market research resource or agency, as question planning, survey delivery and research methodology will all play a key role in the validity and use of the data generated.
The question of cost
Sometimes businesses will make the mistake of avoiding the more expensive forms of primary market research – or market research as a planning phase altogether – because of the cost. However, if you are serious about avoiding costly errors and invested in seeing the best possible results for your resources, it is essential to gather the right data as a preliminary planning stage. Only then will you have the necessary information upon which to base sound decisions that will take the business forward.