Market research - everything you wanted to know but were afraid to ask
- Market research involves gathering information on processes, phenomena and causes in a particular industry.
- Given the time horizon, we can distinguish two types of market research: market data analysis and forecasting.
- Depending on , research is divided into quantitative and qualitative.
- Based on the type of data analysis, we also distinguish between two types of research: primary and secondary.
- Due to the way it is organized, research is divided into internal and external.
- Based on the purpose, we can distinguish different types of analysis. Among the most important of these are exploratory studies, test studies, and others such as price studies.
- Market research helps businesses thrive, and gives them the opportunity to gain a kind of competitive edge, forecast demand, and set their marketing strategies in the best possible way.
- The opportunities provided by market research are most often used by existing companies, for whom knowledge of data on the industry in which they operate is invaluable, and by companies planning to expand into new markets.
- Both the length of each project and the cost are determined on a case-by-case basis.
I recently had the pleasure of attending a trade fair for consulting companies. However, I was surprised by the number of questions I received about the services offered by the consulting company where I work. Among the answers I was given, it was often stated that we do market research.
Unfortunately, in most cases this answer did not satisfy my interviewees. This was due to the fact that not every person is aware of what market research actually is and how it is carried out. Answering these questions required me to explain at length so that my interlocutors would understand what our company's core business is all about.
Therefore, in order to enable a wider audience to understand what market research is, I decided to gather the most important information
and present them in an accessible way. At the same time, I wanted to show the benefits that can be given to a company by a well-conducted market analysis and explain why this type of research can greatly facilitate the company's decision-making process regarding the further direction of its development.
What is market research?
Market research involves gathering information on processes, phenomena and causes in a particular industry. Quoting Jerzy Dietl, professor of economic sciences, market research is "a complex of activities leading to the knowledge of market phenomena, factors and processes, their genesis, current shape and development trends." Its purpose is to obtain information on basic market mechanisms such as supply, demand, prices of products/services, but also the behavior of competitors operating in a given market, consumer preferences and expectations, sales systems or distribution networks.
What are the types of market research?
Taking into account various types of criteria, market research can be divided due to 5 aspects, which include:
- time horizon,
- method of data acquisition,
- type of data analyzed,
- The way a particular study is organized,
A more detailed breakdown of the research, due to the factors mentioned, is presented below.
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Data analysis vs. forecasting
Considering the time horizon, we can distinguish two types of market research. The first is the analysis of market data on past and current phenomena. It involves obtaining all available information through methods such as interviews, using databases (e.g., Central Statistical Office), conducting surveys, etc. The second type of research is forecasting, which makes it possible to learn about trends, as well as to predict the future situation in the market under study.
Quantitative and qualitative research
Depending on , the research is divided into quantitative and qualitative. Quantitative surveys provide statistical inference because they are numerical data. They also make it possible to obtain a number of indicators that allow recognition of the state or trends of the market. Qualitative research is conducted on smaller groups of respondents than quantitative research and is used to analyze a phenomenon in depth. They are based on interviews, focus studies or focus group discussions. They are mostly conducted to obtain information other than simple numerical data. We use them to get answers to the question "why?".
Primary and secondary research
Based on the type of data analysis, we also distinguish between two types of research: primary and secondary. Primary research involves the collection of data, obtained directly for the specific study being performed. Their great advantage is their timeliness and relevance (they concern the specific market in question).
Secondary research uses data collected in the past in various types of studies, columns, essays, statements in industry forums, financial and statistical reports and also databases. They are mostly less costly due to the fact that databases do not have to be created from scratch and (in the case of popular markets) are much simpler to obtain than primary data.
Internal and external research
Due to the way it is organized, research is divided into internal and external. The first, rely on the use of information already collected regarding, for example, the financial situation or competitors, which makes it unnecessary to use external data. The second, on the other hand, make use of information obtained by other companies, or offices (e.g., the Central Statistical Office).
Research depending on the purpose of the study
By purpose, we can distinguish different types of analysis. Among the most important of these are:
- exploratory research, whose purpose is to identify the problem under analysis or to understand the essence of the phenomenon,
- test studies involving testing of new products, for example,
- other research, such as price, whose task is to determine the level of price equilibrium or farm panels households, serving to show changes in consumption.
Why is a market survey performed?
The variety of market research methods gives analysts the opportunity to make inferences on many levels. However, it is worth considering how the research in question can contribute to the development of a particular enterprise.
Although it is not the responsibility of any company to conduct a market analysis, but nowadays, with huge competition in many markets, every company is trying to get as many customers as possible. Knowledge of demand or competitive data can be essential for a business to thrive.
Market research, for sure, helps businesses achieve this goal, and gives them the opportunity to gain a kind of competitive advantage, forecast demand, and set their marketing strategies in the best possible way. From the point of view of a prudent businessman, such research is certainly necessary.
Market research - for whom is it useful?
The opportunities provided by market research are most often used by existing companies, for whom knowledge of data on the industry in which they operate is invaluable. This can also prove useful for individual investors and start-ups planning to launch their businesses. Information on barriers to entry, competition or the size of a particular market, definitely helps companies get started.
Companies planning to expand into new markets also benefit from the research. Knowledge of such information provides the opportunity to better plan marketing strategies, and can be an incentive to enter a particular market more quickly. It is also likely that this type of analysis will protect the company from potential "slip-ups."
A prime example is the well-known automotive company Rolls Royce, which, when launching the "Silver Mist" model in Germany, did not check the meaning of the word "mist" in that language beforehand. In Germany, it means "manure," which consequently did not encourage people to buy a luxury car.
How long does it take and what is the price of a market study?
Both the length of each project and the cost are determined on a case-by-case basis. Among other things, it all depends on the problem under consideration, the number of consultants carrying out the project, and the amount of information to be obtained. Depending on the scope of the study, a deadline is set by which the results must be provided to the client.
Market research also depends on factors such as project size and data availability. Primary research carries a higher cost and time requirement, while secondary research, which is cheaper to perform, is not always sufficient. Often, only in-person interviews provide the necessary information.
So what is market research really?
In conclusion, in order to answer the question posed, it is not enough to formulate a short definition, as this is a very broad topic.
It can certainly be said that this is an extremely helpful measure, among other things, for start-ups that are anxious to get off to a good start. This is because market analysis helps gather very valuable information that can facilitate competitive advantage. Companies wishing to operate in existing markets need information and data, which are obtained precisely through market research.