This article is about the market research process. As we know that market research does not guarantee success as it is simply a recognition of the environment within which marketing takes place.
In the fields of science and engineering researchers are often working with deterministic models of the world where one action is a necessary and sufficient condition for another action to occur. For instance, an increase in pressure is usually necessary and sufficient to bring about a rise in air temperature.
In the social sciences, and this includes marketing and market research, the phenomenon under investigation rarely, if ever, lends itself to deterministic modelling. Consider the marketing problem of determining how much to spend on promotion in order to achieve a given market share. The link between promotional expenditure and sales is not so direct as that between pressure and temperature.
There are a great many more intervening variables, including the media used, the effectiveness of the promotional message, the length and frequency of the campaign, not to mention the many dimensions of the product, price and distribution.
The market research process in 4 STEPS
The first step in the market research process is to have a clear idea of what the problem is that needs to be investigated. Then, specify what the purpose of the research is. Figure out the appropriate sources. Finally, conduct the market research.
1. Identify the management problem
Management problems can be identified within any of the following areas including the market, competition, the product, pricing the product, promotion or distribution of the product. Without identifying the management problem appropriately, the business would thousands of dollars on undertaking market research that is not useful.
Here are some examples of general problems related to marketing that might be investigated by market research:
- What is the overall market situation?
- Are sales of the product(s) satisfactory?
- Is the business strong enough against competitors?
- Does the firm have enough satisfied customers?
- Should the firm launch new products to the market?
2. Clarify the purpose of market research
After identifying the problem that exists in the business, setting out the specific purpose comes next. The real issues should be investigated. Without clarify the purpose of market research, lots of redundant work would be done and unnecessary data collected.
Here are some more specific purposes that might be investigated by market research:
- What size of the current market and potential market for the business?
- Why are our sales falling and how to prevent it?
- What is the best way to enter into the foreign market with current products?
- How to win over the closest competitors to increase market share?
- What groups of customers buy the firm’s products?
- Are there any new market segments that the company can sell into?
- Can the business increase its distribution network to sell in new cities?
- Are the current pricing strategies effective in maximizing profit?
- What the best promotion methods to boost sales?
3. Set market research objectives
The market research objectives like any other business objectives must be SMART – Specific, Measurable, Achievable, Realistic and Time-Specific. The research objectives should be set in such a way that after achieving them, the firm has all of the information needed to solve the initial management problem.
Here are some examples of market research objectives that can be answered through market research:
- How many people are going to buy our new products in the US?
- If the price of the new shampoo is going to be reduced, will this increase sales volume in the UK?
- If we decided to advertise this new product on the radio, what will be the likely impact on sales volume in Switzerland?
- Which new product idea, a flying car or an electric airplane is likely to generate more sales in the next 10 years?
- How will new packaging impact on sales of our computer software?
- What are three main reasons for an increase in customer complaints about our products last year?
4. Conduct primary and/or secondary market research
The business will need to come up with sources of data that can be used to conduct market research.
One of the most difficult aspects of researching a market is locating hard numbers such as finding market share figures, sales growth rates, profit margins, etc. That is where secondary market research comes in handy.
Usually, the secondary market research data is collected first from second-hand sources. This information already exists as it was originally gathered, by another business or non-business-related organization, and analyzed for a different purpose perhaps. Hence, the business can use it at large for free. The secondary market data usually outlines the market features and characteristics of market participants.
Here are some common methods used for conducting secondary market research:
- Industry trade information
- Corporate reports
- Governmental statistics
- Press Releases
- White Papers
- Newspapers
- Magazines
- Journals
- Research papers
In addition, the primary market research data is collected from first-hand sources. This information does not exist in the form of second-hand data. It will be gathered by a business itself for undertaking market research for the first time for its own needs. The primary market data is usually used to a new product launch, or product improvements.
Here are some common methods used for conducting primary market research:
- Interviews
- Surveys / Questionnaires
- Focus Groups
- Observations / Tracking
- Consumer Panels
- Case Studies
- Experiments
- Test marketing
In conclusions, the results of the market research process help to evaluate different marketing actions to be taken in making business decisions.
