What is Market Research?
Market research refers to the process through which a company can determine the viability of a new product. It can be a new product or service or a variation or upgrade of an existing product.
Through market research, a company can discover the target market and collate feedback on the level of interest of potential customers on the product. It can be used in the product development stage to customize the product or even in the marketing phase while devising segment-specific promotional activities.
- Market research refers to the process through which a company can determine the viability of a new product.
- Market research is important not only to ensure that the product being offered is suited to the tastes of its consumer base but also to determine potential demand.
- A combination of primary and secondary data makes up the information pool in market research.
How is Market Research Conducted?
Usually, market research is conducted by the company in-house, which means that the company offering the product collects and analyzes the data. Other companies may outsource the market research process to third-party firms.
Market research can be conducted in a variety of ways, such as surveys, focus groups, product testing, etc. Sometimes, the test subjects (potential customers) may be compensated with product samples or a small stipend.
Data collection methods have significantly changed over time. Before, companies would interview people on the street and collect feedback about their advertisements in publications. Towards the 1980s, data collection was increasingly done in the telephone mode, which led to a drastic improvement in market research models. Operators could organize focus groups or collect information via cold calling in an organized manner.
Since the beginning of the 21st century, market research has shifted online. People can now sign up for surveys, fill in feedback forms, or give ratings on apps.
Why is Market Research Conducted?
For any company that aims to launch a new product, it is important to ascertain the views of the target audience on the distinct features of the product, not only to ensure that the product being offered is suited to the taste of its consumer base but also to determine potential demand. Demand forecasting is crucial before starting the production of a product.
Moreover, gathering information is important for segmenting markets and differentiating the product. It can later be used to tailor advertisement efforts and focus on the features that the consumer is most likely to prioritize while making a purchase decision.
To complete the market research process in a comprehensive manner, the firm must engage in a variety of tasks, such as gathering information on the market sector. The data collected must be analyzed to disclose patterns or trends or to focus on the most relevant data points.
How Does Market Research Work?
A combination of primary and secondary data makes up the information pool used in market research.
1. Primary Information
Primary information is data collected by the company or a third-party firm. This type of information can be categorized into exploratory research and specific research.
Exploratory research – It follows a questionnaire-type method wherein open-ended questions are asked from the target audience in a loosely structured manner.
It leads to issues and problems from the consumer’s point of view being brought to the notice of the company. The company must address the concerns before launching the product.
Specific research – It is aimed at finding answers to issues that were identified during the process of conducting the exploratory research.
2. Secondary Information
Secondary information is data that is already publicly available. It can include government-collated data such as the census, reports of trade associations, etc. Data collected by other businesses that are operating in the same sector may also be used (if available).
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