First, let’s clarify that the market research business is a quite different from a couple of years ago. It changes, evolves and grows constantly.
However, its basic nature and the purpose still serve the same goal – to understand what your customers want and need.
On this page:
- What is market research? Definition. Why it is so necessary and what is its purpose?
- Importance, key advantages, and benefits for the business.
- What are the two main types of market research?
- Infographic in PDF for free download
No matter if you are going to create a completely new product or you want to develop the existing one, you need a good market research process.
Market Research Definition and Importance
In simple words, it is the process of collecting, analyzing and interpreting information about a particular target market.
It might be a research about a product or service, customer habits, and needs, a particular industry or competitors.
You know how important is the accurate information delivered on the right time. It is crucial for overall business success. Without the right information about the market, your business can’t do the most important – to solve the customer problems.
To run a profitable company, it is vital that you perfectly know who your customers are, what are their needs, and how to cover them. As you see the product of market researcher is data.
However, a good market research should not stop with data. Data are the collection of opinions, facts, statistic and other types of information that tell us something important.
More than ever before marketing research is transforming to intelligence that aim to helps us make smart moves.
So, what is the purpose of market research?
Simply, its purpose is to give you the right information for important market variables regarding your business.
The purpose is to collect relevant data on customers, competitors or products. The collected data allows your company to do effective decision making in the right way.
Therefore it decreases the risks involved in making a variety of decisions in an organization.
The environment that you operate is so dynamic.
Changes in economic conditions, demography, technology, customer needs, beliefs and etc. affect the way you do business.
Let’s sum the market research benefits and advantages:
1. You are closer to your current and potential customers
You understand better your customers – their characteristics, preferences, expectation, needs, beliefs and etc.
2. Helps you identify new opportunities in the marketplace
Market research can give you a hint and can open your mind for new ideas to increase sales and grow your business.
3. Helps you to identify potential problems
You are able to see consumers’ reactions to a service in a development stage. This can give you a view how to go further.
4. Minimize risk
Starting a new product, for example, hides a risk. There are chances you to make profits or losses. It mainly depends on how your customer accepts the new product. However, a market research minimizes the risk. Through market research, you can find almost all the information you need to decide what action to take.
5. Market research support you to establish your market positioning
Information from market research allows you to know what is your current position and help you to monitor your progress. You can use market research to figure out particular ratings, including how customers rate your product quality.
6. Help you to find out how to be better than your competitors
The research of a target market gives you the opportunity to know competitors well and to examine their strengths and weaknesses. This gives you ideas on how to offer better products and services.
7. Measures your reputation and help strengthen your credibility
Market research not only finds out where you are now but also allows you to improve your own reputation and give people more confidence in your decisions.
8. Allows you to make better plans
By examining the crucial factors in a target market, you can better predict how the market and your business will become in the future. With this data, you can adjust your business to fit the future needs and expectations in the market.
9. You are able to stay on track with the last industry trends
Your business will know and constantly will learn about the changes in your customer needs and requirements, your competitor’s efforts, what are the upcoming technologies and etc.
10. You are able to come up with professional decisions
As we mentioned above the informed decision making is the main purpose of market research efforts and activities. The research can give you all marketing benchmarks that you need to constantly improve your company’s marketing strategies.
11. Improves communication with your customers
Market research can really boost effective communications between your company and your customers. You can communicate with understanding and have the right ideas on how to handle the customer’s questions.
The two main types of market research
Now, as we saw the key advantages, let’s go further and understand what are the main two types of market research. The two essential types of research you can perform are primary and secondary research.
If you want to meet your specific need, primary research is designed to help you.
What is primary market research?
Primary research is used to directly gather information from potential customers.
The most common methods for collecting data are:
- focus groups
- field testing and more.
You can do the market research by yourself or by hiring a research company to do it for you. The crucial benefit of primary research is that it gives you more specific results. Results that cover your particular needs.
Primary research is all about answering questions relevant only to your company.
A disadvantage of primary research is that it can be expensive and time-consuming. It refers to when you are hiring a research company to lead the research.
As we saw above primary research involves the gathering of fresh data.
On the other hand, secondary research involves the use of existing information that has already been collected.
It might be demographic data from industry statistics gathered by government agencies or any other type of data already collected through primary research.
In secondary research, you just use previously completed examinations and apply their results to your case.
In this type of research, you normally spend less time and less money. Furthermore, it can be completely free, if you use the internet, research journals, a library and etc.
While secondary research is less targeted, it is still valuable information that your business can use.
Customers always will be the most crucial part of any business. Today, if the customer is not in the center of your business, your business has no future.
This is where market research comes to help you understand your customers’ needs and to give you the power to make informed decisions with reduced risk.
Market research is a weapon that allows you to uncover the truth hidden under a variety of assumptions.
Knowing the truth about the needs, expectations, and desires of your audience, you have the core basis for building trust and make your business successful
What is Market Research Infographic for free download in PDF