Smart decision-making in business and investing is a part of the market research. Whether it is a new product, a new market or polishing out an investment strategy, it is important to know the customer behavior, the industry dynamics and competitive trends. Well-performed market research will equip the company with the information necessary to decrease risk, identify opportunities, and maximize performance.
Lets read on how to do market research looks into the principal forms of research and gives a practical illustration on how it is applied in the real world.
What Is Market Research?
Market research consists in methodically collecting, analysing, and interpreting data related to a target market, consumers, competition and industry conditions. It aims at assisting organizations and investors to make more informed decisions by eliminating uncertainty.
Market research is used by business companies to:
- Establish customer needs and preferences.
- Determine the demand of the products or services.
- Review rivalry and market vacuum.
- Lay down pricing policies.
- Forecast industry trends.
In the case of investors, market research is not just restricted to consumer but also to the economic trends, the performance of the industries and the new innovations that may impact on stock prices or value of assets.
Why Market Research Matters
Big companies are not the only ones to conduct some market research. It is useful to start ups, small businesses, and individual investors. Its strengths will include:
- Risk minimization: Facts, but not guesses, are used.
- Opportunity discovery: Novelties or unfulfilled demands can be detected in good time.
- Customer alignment: Organizations position their products and favoritism to the real customer preferences.
- Competitive advantage: Firms can be more efficient in positioning themselves to know what other firms are doing.
- Resource optimization Resources are saved in terms of time and money in order to concentrate on the highest probability of success in strategies.
Action to take in order to carry out market Research
Define the Objective
Get yourself straight beforehand in what you want to learn. Do you aim to measure the demand of a new product? Evaluate customer satisfaction? Or know the strategies of rivals? The scope of the research is determined by a well-defined goal.
Identify Your Target Market
Have it clear who you are doing a research on. This could be:
- Demographic characteristics (age, gender, income).
- Geographic (urban and rural, regions, countries).
- Habits (loyal customers, online shoppers, price-sensitive buyers)
Select Your Research Methodology
Choose between the primary research (data collection) and secondary research (utilizing existing data). In most cases both are used together in order to get a complete picture.
Collect Data
This may be through surveys, examination of financial reports, research on the industry or online analytics software depending on how you choose to do it.
Analyse the Data
Arrange the data gathered and search patterns. Interpret results by use of statistical tools, charts or software.
Draw Conclusions and Act
Conclude on what has been learnt. Turn research into action plans- be it response to do with your marketing campaign, modification of a product or a different group of customers.
Monitor and Update
Markets evolve quickly. On-going research means that strategies remain relevant and workable.
Types of Market Research
There are different ways, in which market research can be classified. The primary vs. secondary and qualitative vs. quantitative research are the two key differences.
Primary Research
This would be a first hand information that is sourced out.
- Surveys: Mailings to customers or prospects.
- Interviews: This is a face-to-face interview offering in-depth information.
- Focus groups: It involves conversations with small groups to investigate opinions.
- Observation: Real world customer behaviour.
Advantages: Customized, updated, personalized.
Disadvantages: time-consuming, expensive.
Secondary Research
This applies using external or internal data that is existing
- Government reports.
- Industry studies.
- Academic papers.
- Company reports and financial filings.
- Online market databases.
Advantages: cheap, quick, offers general overview.
Disadvantages: Can be old-fashioned or not applicable in practical cases.
Qualitative Research
Dwelling on attitudes, motivation, and views
- Open-ended interviews.
- Focus group discussions.
- Ethnographic studies.
Best suited; To investigate consumer behavior
Quantitative Research
Includes statistical analysis and numerical data.
- Large-scale surveys.
- Website traffic analytics.
- Sales and revenue trends.
Best in cases: How many or how much.
Examples of Active Market Research
We shall take a realistic situation
Firm: A middle-level company that deals with drinks that intends to launch a new flavored sparkling water.
Step 1: Define the Objective
The research question that the company will be interested in is whether there is a market among young urban consumers who are interested in wine flavored with strawberry-lime. In addition to demand, it is also aimed to check the pricing sensitivity and find the most efficient marketing channels.
Step 2: Identify Target Market
Target the health-conscious consumer segment within the 18 to 35 years of age within the metropolis. This target audience is more likely to use low-sugar-option, attach importance to natural ingredients, and follow trends of beverages on social media.
Step 3: Primary Research.
Surveys: The surveys were emailed to 2000 respondents and asked them about the drinking habits they have, their favorite flavors, and whether or not they were willing to pay.
Focus Groups: There were five groups conducted with eight participants in each group who were invited to give a taste to various sample flavors such as strawberry-lime, mango-pineapple, cucumber-mint among others.
Observation: Researchers attended gyms, cafes, and co-working places and conducted observations related to the purchase of beverages in real-life settings.
Step 4: Use Secondary Research
Nielsen and Statista industry reports were studied in order to learn the growth pattern of the $29 billion sparkling water industry.
Health surveys conducted by the government indicated an increasing preference of consumers towards the low-calorie drinks.
Product competitor releases were monitored and found out that citrus and berry flavours had been displaying steady sales growth over the last three years.
Step 5: Analyze Findings
According to Survey Results, 65 percent of random participants were very interested in fruit-infused sparkling water, though, strawberry-lime became the most promising.
Price Sensitivity: The majority of the respondents expressed a desire to pay a market-average price of 175 to 200 per can on the condition that the product would have a tagline of natural products and no artificialized sweeteners.
Competitor Analysis There was a significant opportunity, but also the necessity of differentiation, given that one of the key competitors had introduced a lemon-mint version within six months with moderate success.
Feedback on Focus Group: Strawberry-lime as rated in terms of taste and refreshing was rated the highest. The cucumber-mint alternative created a niche market, but not mass-market with some people loving it and others hating it.
Step 6: Action Plan
Resting on these results, the company made a number of strategic decisions:
Product Launch: introduce the strawberry-lime as the main flavour and mango-pineapple as the secondary one.Pricing Since the product will be natural sourced and the packaging trendy, then price it at 1.89 per can as slightly premium.
Distribution: Begin with some local retail outlets, gyms, and organic cafes, and expand to the rest of the country.
Marketing: Collaborate with micro-influencers, both in the fitness and wellness circles on Instagram and Tik Tok. The slogan of the campaign was the focus on zero guilt refreshment.
Step 7: Post-Launch Monitoring
The first three months of the pilot launch in two large cities recorded more sales than projected. The level of social media involvement was also better than expected, and the hashtag campaign raised 1.5 million impressions.
The company observed though that the highest repeat purchases came out members of the 24- 30 age bracket, with the older consumers being less involved. Subsequent campaigns were more aggressive on the basis of this understanding to the younger professionals.
This case illustrates the way in which both primary and secondary research can be used to minimize uncertainty, create a better strategy and enhance the chances of success. It also demonstrates how continual monitoring is necessary to make things change fast after launch.
Different tools and techniques that are used in common market research-
- SurveyMonkey and Google Forms Online surveys.
- The analytics: Google analytics, SEMrush and social media insights.
- Statista, IBISWorld, Nielsen reports.
- CRM Data: Data of customer relationship management software in behaviour tracking.
- AI and Big Data: Predictive analytics in anticipating consumer trends.
Dilemmas in Market research
- Bias: The survey or question asked may be designed poorly and lead to bias.
- Cost: Vast researches may be costly.
- Time limitations: Data gathering and data analysis will slow down the decision process.
- Shifts in the market: In the fast-paced industries, information may become obsolete within a short period of time.
- Availability of respondents: It is hard to locate the correct sample group.
How to do a Good Market Research
- Have specific goals- do not have vague goals.
- Apply a combination of approaches- Use surveys and industry reports.
- Os technology: apply analytics software to gain an in-depth analysis.
- Dwelling on quality, rather than quantity- a small dataset which is correct is more helpful than a large dataset but biased.
- Keep up to date–the markets change, and thus update your data regularly.
FREQUENTLY ASKED QUESTIONS-
1.What are the predominant forms of market research?
These are the two main ones namely, primary research (new information) or secondary research (existing information). Both of them may be qualitative (opinions, motivations) or quantitative (numerical, statistical).
- What will it cost to conduct market research?
Costs vary widely. The survey of a few hurt can be done by a small online survey which can cost a few hundreds, whereas the studies conducted by professional firms can cost tens of thousands.
- What is the Affordability of market research to small businesses?
Yes. It is accessible to small businesses and startups because of numerous cheap software and free resources, including Google Trends, governmental reports, and customer reviews.
- What is the duration of market research?
It depends on the scope. Simple online questionnaires can be filled in within days whereas big studies can take weeks or months.
- Which industries will gain most with market research?
It is very beneficial in all industries, but it is of paramount importance when dealing with fast-moving consumer goods (FMCG), technology, healthcare, finance, and retail where customer preference and competitiveness evolve very fast.
Read also: Market Analysis: How to Do Market Research
