Market Research methods

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What is market research?

Market research is the process of collecting, analyzing and interpreting information about a market, product or service that is for sale in that market. It gathers information about past, present and potential customers for the product or service by gathering data on the characteristics, location, needs and spending habits of the target market, industry as a whole, and competitors.

There are two types of data involved in market research:

  1. Primary information: research carried out by yourself, or someone that you have hired.

  2. Secondary information: research that had already been compiled by someone else. This includes reports and studies by government agencies or other businesses within your industry. Most research will be secondary information.

The Five Basic Methods of Market Research

  1. Surveys: by using concise and straightforward questionnaires, it is easy to analyze a sample group that represents your target. The bigger the sample, the more accurate the results. Surveys can be carried out in-person, online, via telephone or via mail.

  2. Focus groups: here one person leads a discussion using a series of questions of topics to a group of people. These sessions generally last one to two hours and will take at least three groups to get balanced results.

  3. Personal interviews: these include unstructured and open-ended questions to individuals. These usually take an hour. Both personal interviews and focus groups are limited in their reliability as they are both subjective and don't represent a large enough proportion of the population. However, they both provide valuable insights into customer attitudes.

  4. Observation: Individual responses to surveys and focus groups can often be at odds with people's actual behavior. However, observing them in stores, at work or at home allows you to observe how they buy or use a product or service.

  5. Field trails: Testing our new products or services in selected stores/locations allows you to test customer reactions in real-life selling conditions. This can help you to see if any modifications need making.

Advantages of Market Research

  • -> It helps companies to plan by providing accurate and up-to-date information about the demands, changing tastes, preferences and buying habits of their customers.

  • -> It guides your communication with current and potential customers.

  • -> It allows you to identify opportunities in the marketplace.

  • -> Helps you to minimize risks.

  • -> It uncovers and identifies potential problems.

Disadvantages of Market Research

  • -> Conducting market research can be very costly. For example, you may have to hire a research company to do it for you, which can cost on average $20,000.

  • -> Poorly formulated research can result in inaccurate or false feedback.

  • -> Market research is a time-consuming process. To have a relevant market survey, you must gather and analyze the data quickly in order for it to remain up-to-date.

  • -> The markets are constantly changing; meaning market research is quickly outdated.

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