Market Research Note

Market Research A business will carry out market research to collect, analyse and present information relating to its customers, competitors and markets. Understanding Customer Needs A successful business must understand its customers' needs, including: Price How much customers are willing to pay for a product Quality Customers' quality expectations for a product Choice The options available to customers selecting a product Convenience How easy it is for customers to purchase a product The Purpose of Market Research Market research is a vital part of understanding customer needs. It is also performed to: Identify Gaps in the Market Customers' unfulfilled needs create a gap in the market that can be filled by launching a new product, updating an existing one or promoting it in a different way. Reduce Risk Selling a product that customers do not want or that is too expensive leaves the business open to the risk of financial loss. Inform Business Decisions Better-informed managers and businesses make better decisions. By understanding its customers and its markets, a business can focus on selling the right products in the right location and at the right price. Secondary Research Secondary research involves accessing data that already exists. This is information that has been collected by a third party in the past. It can provide important information on the market and help businesses to analyse previous trends and provide a forecast. Advantages Data is usually cheap and easy to access. Data is useful for analysing large market segments. Data is often already in an easy-to-interpret format. Disadvantages Data is not always up-to-date and relevant. Data is not specific to the company. Data is available to all, including competitors. Examples Market Research Reports Government Reports Newspapers and Magazines Newsletters and Blogs Primary Research Primary research is carried out first-hand by the researcher to collect new marketing information from customers, potential customers or potential retailers. Advantages Data is up-to-date, relevant and specific. Data provides an insight into the market. Research can be tailored to the business's needs. Disadvantages Research can be expensive and time-consuming. To be accurate, a large sample is required. Examples Questionnaires Focus Groups Surveys Observations Qualitative and Quantitative Data Primary research can be qualitative or quantitative. Each has its own strengths and weaknesses, but the best kind of market research will effectively use both methods. Qualitative This involves asking people open questions about their views and opinions. It is good for gaining in-depth responses, but it can be difficult to compare subjective opinions. Quantitative This involves asking closed questions, which require specific answers, such as 'yes' or 'no', or answers that are measurable or expressed numerically. Responses are easy to analyse but can lack detail. Social Media Social media outlets such as Facebook, Twitter and Instagram are powerful means of keeping up-to-date on current trends and collecting information. This makes them perfect for market research. Users often follow pages relating to products and services that they like and provide valuable feedback in comments sections and reviews. Remember, the more reliable the research, the more useful it is for the business! To get the best out of market research, information needs to represent the entire target market, not just a specific portion of it. Research can be time-consuming and costly, so it needs to be relevant and reliable if it is going to inform business decisions.