Market Research
Market research is an essential element of marketing, which creates an informational basis for the development of strategy and tactics of behavior on the market in a competitive environment. The main point of this research is qualitative and quantitative analysis of the market, the purpose of which is to determine the potential volume of the market, study of existing demand for goods and services, the level of competition and characteristics of the competitive environment.
Market research can help to launch products that are of interest to the public before they are launched. It is a basic element in the research and development (R&D) of a new product or service.
Understanding Market Research
Market research is the collecting, classifying, and analyzing of information about the market situation: prices, competitors, users, and others. Market data allows a business to build a strategy and minimize uncertainty, to research the target market. Market research is conducted by individual companies and specialized agencies.
There are several aspects to be studied. First of all, market information, which includes suppliers' prices and supply and demand ratio (it is important that such information for the study should be collected in different formats from several independent sources).
Next, market research involves the study of market segmentation (its division into subgroups formed on the basis of an essential attribute (or several attributes) - geographical, gender, demographic, etc.) Finally, the most important objects of research are market trends (trends present in the market, analysis of historical statistical data and forecasts of development prospects).
Companies conduct market research to understand consumer wants, develop a product based on their needs, and stay competitive with other companies in the industry.
Internal marketing analytics answer the question "what's going on." Market research will answer the question "why is it happening". For example, some kind of analytical data shows that 20% of users drop an item in the cart of an online store. Marketing analysis will explain why this happens: very high shipping costs, inconvenient terms, competitors have cheaper prices, and so on.
How Market Research gathers information
Market research is made up of primary and secondary information.
Primary Information is collected by the company itself or by a specialized organization hired to do it. This type of information is represented by two categories: exploration and special research. Exploration research is aimed at formulating questions to identify difficulties or problems that need to be solved. Special research is oriented on finding ways out of difficulties and solutions to problems that often arise during an exploration research.
Secondary information is provided by external sources. That is, it has already been collected by an outside organization and this data can be used. For example, government censuses can provide information about the population. Trade associations or other businesses in the same market sector may have research reports.
Example of Market Research
Most often, market research is conducted by companies that have released a new product. Market research is also conducted among consumers to get information on what types of products or services they want and what types they don't want.
That is, a start-up company tests the interest of customers and consumers in its product or service. In this way, product manufacturers or service providers test the validity of a product or service. If the need for the product or service is high, the results of the research are the basis for creating a business plan. If there is little interest in the product or service, the results of the research are used as the basis for making changes to meet the requirements and desires of the users.
