Market research examines the operating environment of a corporation. It includes all of the processes and operations that deal with the systematic acquisition of knowledge, including searching for, collecting, analyzing, and interpreting information. This knowledge supports the marketing activities of corporations.
Market research is generally divided into four categories: market research, consumer research, product research, and media research. It can be performed either by using secondary sources such as data and information that has been collected beforehand or through primary research that refers to collecting data on a specific topic directly in the market. When conducting market research, researchers apply qualitative and quantitative research methods.
Market research aims at investigating the conditions in which a corporation operates. The acquisition of market information has two main goals. First, market information can help to solve problems that the company is facing and allows managers within the corporations to make better decisions. If sales of a certain product decrease, market research can present answers as to why consumers do not buy the product anymore or why they prefer the product of a rival. Market research can help to locate and identify corporate problems and to develop solutions for them.
Second, market research helps to identify future trends and challenges for corporations. Firms are facing increasing competition from an ever-growing number of competitors. In order to bring successful and profitable product ideas to market as fast as possible, the corporation needs to identify any changes or trends in customer needs so that they can be integrated into marketing planning. Thus the company needs information about market potential, market share, and trends in consumer behavior.
Stages Of Market Research
Market research is performed in several stages. At the beginning of the market research process, the problem or challenge the corporation faces has to be defined in order to be solved. Information to accomplish this can be found in the market. The company can either carry out the research activities itself or hire a market research agency to do so. In some cases, information on the topic of interest already exists within the company or in official organizations, such as ministries, research institutions, or market research agencies. The next step, namely the analysis and interpretation of the data and information acquired, is the most important one. Finally, the acquired data is integrated into the marketing activities of the corporation.
The acquired information is communicated via marketing-information systems within the company. A marketing-information system facilitates the organized and regular dissemination of information to all managers within an organization to support their decision-making processes. At the end of the market research process, collected information will influence the marketing activities of corporations.
Areas Of Market Research
Market information has various forms. They include information about the researcher’s own company, its market position, its development, and its growth prognosis as well as competitive strategies and information on rival corporations. As its name suggests, market research investigates the operating market of a corporation and the changes that can be observed in these markets. Another relevant area is the research of consumers, their attitudes, needs, and behavior. Market research can further investigate products and their acceptance and usability. Product research aims at avoiding problems in product usage and acceptance by applying product, color, or flavor tests. Market research is also conducted to investigate the effectiveness of media used in marketing activities. Questions investigated in this field concern the image of communication channels, how many and which consumers they reach, and the efficiency in communicating the corporation’s advertising messages.
Market research is divided into secondary and primary market research. Secondary research is based on data, which has been investigated beforehand. Secondary data is often found in governmental organizations, such as chambers, ministries, or research institutes. Primary market research, on the other hand, is data that is only collected to answer particular questions that a company may have.
If a company is interested in offering a new product (e.g., yogurt) in a new market, it can support its market entry decision with secondary data on the market conditions. Secondary data may include information about market conditions, market volume, country sales numbers, or general market trends such as changes in consumption styles. The question of which yogurt flavor customers in a market prefer cannot be solved with secondary data. It must be investigated via primary research within the target consumer group. Primary market research involves product tests and integrating the results into new product development processes. This is to decrease the risk that the product will not be accepted by consumers.
Market information can be collected via internal and external resources of the company. Internal sources are company statistics, consumer data, and sales data as well as data on cost accounting. External sources refer to information that derives from market research institutes, consultancies, experts, journals and industry indexes, governmental organizations, commercial chambers, universities, or other research institutes.
Qualitative And Quantitative Research
Market research methods are further divided into qualitative and quantitative methods. Qualitative market research attempts to provide in-depth information on certain topics and can therefore find out consumers’ attitudes or their changes in them, their values, and their reasons for making purchase decisions. Qualitative market research methods include qualitative interviews, focus groups, observations, and experiments. Qualitative interviews consist of open questions that allow identifying psychological and sociological backgrounds and the relationships of a certain topic. Focus groups are group discussions in which a group of consumers discuss their use and impressions of a certain product. This discussion is moderated and guided by a market researcher and in most cases also videotaped. During the discussion, different and often new aspects concerning the product are presented that enable the company to find out about consumer attitudes.
Observations investigate consumer behavior in greater depth. In consumer research, observations take place in the form of test purchases (mystery shopping), customer frequency surveys, or direct observations of consumers’ purchasing processes. Observations permit investigation of consumer behavior without interference by interviewees. Despite these benefits, observations are only partly usable because market researchers are only observing consumer behavior without investigating the background and reasons for it. Observations are often considered a subjective research method.
Experiments simulate real situations and observe and analyze the behavior of consumers in them. Experiments are used to perform product tests on acceptance, usability, flavor, and store tests. Causal relationships can be discovered in this way. The company can find out the conditions, the store design, and the packaging that positively influence consumer behavior.
Quantitative research methods refer to methods that generalize consumer behavior. Whereas qualitative research methods investigate in depth the consumers’ reasons and attitudes, quantitative research methods find out if these attitudes and reasons are representative for a majority of consumers. Quantitative research methods include surveys conducted in the form of standardized questionnaires. Another quantitative method is a panel, a regularly performed survey on media and purchase behavior of consumers.
- Gilbert Churchill and Tom J. Brown, Basic Marketing Research (South-Western, 2009);
- Bonita M. Kolb, Marketing Research: A Practical Los Angeles (Sage, 2008);
- Carl McDaniel, , Marketing Research (Wiley, 2009);
- William G. Zikmund and Barry J. Babin, Essentials of Marketing Research (South-Western, 2009).
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