What Is Market Research In Business?
Market research is the process of collecting and analysing data related to a target marketplace in order to determine the viability of a service or product.
After gathering the information, the business then to analyses and interpret it to determine the relevant patterns they can use in the decision-making process. The gathered data can be used to tailor advertising efforts that targets the features prioritised by the consumer.
A company that is considering going into a certain line of business usually conducts a market research to test the however their product or service will be accepted by the market. If the market research data confirms consumer interest, then the business can confidently proceed with the business plan. If the research data shows unfavorable, the company can then use the results of the market research to make adjustments to the product.
There are several types of market research methods and they can broadly be classified into two categories:
- Primary market research – which uses information gathered directly by the company.
- Secondary market research — which uses information already gathered by an external entity.
Why is market research important?
Market research is a very important stage in the research and development of a new product or service or feature. Here are some of the reasons why market research is important:
- Market research helps a company to understand how best to penetrate the market and reach its target customers.
- Through market research, a company can study the target market beforehand by getting opinions and feedback from consumers about their interest in the product or service.
- Market research enables a company to test the demand for a new service or product before actually launching it.
- Market research helps companies understand what consumers want in order to gain or maintain a competitive advantage over their competitors in the industry.
Primary market research
Primary market research, also known as field research, is when a business collects data by itself. In primary market research the business collects new data and information that has not been collected before in order to suit its own specific needs.
Primary research methods include:
- product testing
- focus groups.
The company can perform the research itself, or hire a third-party company that specialises in market research. Test subjects are usually compensated with product samples or a small amount of money for their participation.
Primary research generally falls into two categories:
- Exploratory research – which involves less structured and more open-ended questions. Exploratory research results in issues being presented that the company may need to address.
- Specific research – which is performed to try and answer previously identified issues, usually brought to attention through exploratory research.
Secondary market research
Secondary market research uses information that has already been collected by an outside entity not hired by the company. Examples of secondary market research data includes:
- population statistics from government census data
- data from trade association research reports
- data from research conducted by another business operating within the same industry
- data from published articles and infographics.