Market research involves gathering information about the processes, phenomena and causes of a given sector.
Considering the time horizon, we can distinguish two types of market research: market data analysis and forecasting.
According to , research is divided into quantitative and qualitative.
Regarding the type of data analysis, we also distinguish two types of research: primary and secondary.
Due to its organization, research is divided into internal and external.
In terms of purpose, we can distinguish different types of analysis. Among the most important are exploratory research, test research and others such as price research.
Market research helps businesses thrive and gives them the opportunity to gain a sort of competitive advantage, predict demand and set their marketing strategies in the best possible way.
The opportunities offered by market research are exploited primarily by existing companies, for which data knowledge about the sector in which they operate is invaluable, and by companies planning to expand into new markets.
Both the duration of each project and the cost of implementation are determined on a case-by-case basis.
More details below.
I recently had the pleasure of attending a consulting trade show. However, I was surprised by the number of questions I received about the services offered by the consulting firm I work for. Among the answers I was given, it was often said that we conduct market research.
Unfortunately, in most cases this answer did not satisfy my interviewees. This was due to the fact that not everyone knows what market research really is and how it is carried out. Answering these questions required me to give long explanations so that my interlocutors understood what the main activity of our company consisted of.
Therefore, in order for a wider audience to understand what market research is, I have decided to gather the most important information
and present it in an accessible way. At the same time, I wanted to show the benefits of market analysis and explain why this type of research can greatly facilitate a company's decision-making process regarding its future direction.
What is a market study?
Market research consists of gathering information about the processes, phenomena and causes of a given sector. According to Jerzy Dietl, professor of economics, market research is "a set of activities leading to the understanding of market phenomena, factors and processes, their genesis, current form and development trends". Its aim is to obtain information about the basic mechanisms of the market, such as supply, demand and prices of products and services, but also about the behaviour of competitors operating in a given market, consumer preferences and expectations, sales systems or distribution networks.
What types of market research exist?
Considering different types of criteria, market research can be divided into 5 aspects, including:
time horizon,
data acquisition method,
type of data analyzed,
the way a particular study is organized,
aim.
Below is a more detailed breakdown of the studies, based on the factors mentioned.
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Data analysis and forecasting
Taking into account the time horizon, we can distinguish two types of market research. The first is the analysis of market data on past and current phenomena. It consists of obtaining all available information through methods such as interviews, use of databases (for example, the Central Statistical Office), conducting surveys, etc. The second type of research is forecasting, which allows to find out trends and also to predict the future situation of the market studied.
Quantitative and qualitative research
Research is divided into quantitative and qualitative . Quantitative surveys offer the possibility of making statistical inferences because they are numerical data. They also allow obtaining a large number of indicators that allow identifying the state or trends of the market. Qualitative research is carried out on smaller groups of respondents than quantitative research and is used to analyze a phenomenon in depth. They are based on interviews, focus groups or discussion groups. They are carried out above all to obtain information other than simple numerical data. They are used to obtain answers to the question "why?".
Primary and secondary research
As regards the type of data analysis, we also distinguish two types of research: primary and secondary. Primary research consists of the collection of data obtained directly for the specific study being carried out. Its great advantage is its timeliness and relevance (it refers to the specific market in question).
Secondary research uses data collected in the past from various types of studies, columns, essays, statements in industry forums, financial and statistical reports, and databases. They are usually less expensive because the databases do not have to be created from scratch and (in the case of popular markets) are much easier to obtain than primary data.
Internal and external surveys
Based on their organisation, research is divided into internal and external. The former are based on the use of already collected information relating, for example, to the financial situation or to competitors, which makes it unnecessary to resort to external data. The latter, on the other hand, use information obtained by other companies or authorities (for example, the Central Statistical Office).
Studies according to their purpose
As for the purpose, we can distinguish different types of analysis. Among the most important are:
exploratory research, the objective of which is to identify the problem analyzed or understand the nature of the phenomenon,
test studies involving, for example, the testing of new products,
other research, such as price, whose purpose is to determine the equilibrium level of prices, or household exploitation panels to show changes in consumption.
Why is a market study done?
The variety of market research methods offers analysts the opportunity to make inferences at many levels. However, it is worth considering how the research in question can contribute to the development of a particular company.
While it is not the responsibility of any company to conduct market analysis, today, with the huge competition that exists in many markets, every company tries to attract as many customers as possible. Knowledge of data on demand or competition can be essential for a company to prosper.
Market research, in all likelihood, helps companies achieve this goal and gives them the opportunity to gain a sort of competitive advantage, predict demand and set their marketing strategies in the best possible way. From the point of view of a prudent businessman, such research is certainly necessary.
Market research: who is it useful for?
The opportunities offered by market research are primarily exploited by existing companies, for whom knowledge of the sector in which they operate is invaluable. It can also be useful for private investors and start-ups planning to launch a business. Information about barriers to entry, competition or the size of a particular market certainly helps companies get off the ground.
Companies planning to expand into new markets also benefit from research. Knowledge of this type of information provides the opportunity to better plan marketing strategies and can also be an incentive to enter a given market more quickly. This type of analysis is also likely to protect the company from potential "oversights."
A good example is the well-known car company Rolls Royce, which, when launching the "Silver Mist" model in Germany, did not first check the meaning of the word "mist" in that language. In Germany, it means "manure", which did not encourage people to buy a luxury car.
How long does a market study take and how much does it cost?
The duration of each project and the cost of implementation are determined on a case-by-case basis. It all depends, among other things, on the problem under consideration, the number of consultants carrying out the project and the amount of information to be obtained. Depending on the scope of the study, a deadline is set within which the results must be communicated to the client.
Market research also depends on factors such as the size of the project and the availability of data. Primary research is more expensive and time-consuming, while secondary research, which is cheaper to conduct, is not always sufficient. Often, only face-to-face interviews can provide the necessary information.
What is market research really?
In conclusion, to answer the question posed it is not enough to formulate a brief definition, since it is a very broad topic.
There is no doubt that this is a very useful measure, among others, for start-ups that want to get off to a good start. This is because market analysis helps to gather very valuable information that can facilitate a competitive advantage. Companies that want to operate in existing markets need information and data, which is precisely obtained through market research.