What is Market Research? Purpose, & How to Do It
Without market research, business decisions will usually be made based on guesswork, hunches, or momentary emotions. If the capital is only roughly it’s dangerous, you know! You can lose money and a lot of energy even when your business isn’t up and running.
That’s why this market research material is always available in digital marketing and business classes. Because the purpose of market research is to help eliminate subjective opinions when making business decisions. On the other hand, you can find objective insights from consumers so that the products and strategies offered can indeed answer the problems of the target audience.
Well, this article will dissect market research from its understanding, objectives, and methods, to implementation guidelines. If you are interested in this topic, don’t miss it!
What is Market Research?
Market research is the activity of gathering business information regarding market needs and wants. The goal, of course, is for businesses to determine the right steps and strategies for success. At the same time, minimizing errors in marketing activities.
Although related to the market, the scope of market research is not only about customers. However, it can also be about potential customers, business competitors, or general industry conditions.
Later, the results of this market research can affect every aspect of the business. Starting from brands, products, customer service, and marketing, to sales.
The market research method itself can be done in many ways. Starting from interviews, distributing surveys, product testing, group discussions, and others. We will discuss this in detail below.
Market Research Objectives
After understanding the meaning of market research, we will now discuss the purpose of market research. Here’s the full explanation.
1. Identify challenges and opportunities
In general, market research aims to identify challenges and opportunities to achieve marketing objectives. Short, but not easy to do.
In the process, companies must process the data, analyze the data, then interpret the relevant facts to provide the best insights.
Management will use these insights in making decisions related to exploiting business opportunities, minimizing threats, developing alternative strategies, and solving marketing problems.
2. Understand what consumers need
Consumer tastes and preferences are constantly changing dynamically. Therefore, companies may require different marketing strategies from time to time.
What’s the goal? To remain relevant and in demand by potential consumers. When drawn to the broader picture, following what consumers need is the key for a business to survive.
3. Identify market gaps
Sometimes what consumers need may not necessarily be met by the wider business or industry. Well, this is what is known as a market gap.
By finding gaps in the market, companies can find opportunities to develop new products. This has the potential to attract more new customers because there are no competitors.
4. Reduce the potential for product failure
It’s hard to make a product and promote it, upsssss… it doesn’t work.
Duh, you certainly don’t want that to happen, do you?
To avoid such things, market research results can be very reliable. Insights from research are useful for developing the right products and marketing strategies. So, your business opportunity for success is also getting bigger.
5. Minimize business risk
I have spent a lot of money to make products… Eh, it turns out that similar products are already abundant in the market. In the end, it’s hard to sell.
Well, companies can use the results of market research to anticipate this kind of business risk. So, you don’t already spend a lot of money on a business that has little chance of success.
On the other hand, if the results don’t match your expectations, you can still arrange the right and fast response to change the direction of the business.
6. Predict trends
With market research, companies can anticipate consumer needs in the future. This will make your business one step ahead of competitors and be able to take advantage of market opportunities more nimbly.
5 Scope of Market Research
According to Basu Swastha in his book “Marketing Principles” which was first published in 2002, the following are the scope of market research:
1. Market Research and Sales
- Market potential measurement
- Analyze the percentage of the market controlled and its composition
- Investigating market characteristics
- Analyze sales results
- Estimating demand for new goods
- Make sales-related predictions
- Planning potential sales areas
- Assessing sales methods
- Analyze distribution channels
2. Item Research
- Researching competitor’s products
- Analyze existing products
- Conduct market evaluation and testing of new products
- Conduct research on packaging design and characteristics
- Investigate the product mix
3. Corporate Economic Research
- Make short-term predictions (approximately up to a year into the future)
- Determine long-term predictions (more than a year after)
- Analyze company development
- Check pricing policy
- Conducting warehouse and factory site survey
- Analyzing exports and other international activities
- Evaluating the activities of company employees
4. Advertising Research
In it, there are:
- Research on audience motivation
- Researching advertising media
- See ad effectiveness
- Monitor advertising and competitor activity
5. Environmental Research
In it are:
- Analyzing potential environmental impacts
- Evaluating social policies and values
- Examine legal restrictions regarding advertising activities and promotional strategies
When to Do Market Research?
You can do market research for many things. The following are business activities that should be started by conducting market research:
1. Product development
Research and testing are the keys to successful product development. For example, you can do market research on how consumer groups use and their views on the products your brand has.
Observe the use, and see also whether they like or dislike the product. This is important for long-term business continuity.
Evaluating product strengths and weaknesses as early as possible can help you focus more on finding potential product development ideas.
But remember, a product that you think is TOP is nothing if no one will buy it. Maybe you set the price wrong. Market research can also provide business insights to guide you in making decisions regarding pricing.
2. Study on the development of brand image
The brand is the most important asset of your business. But unlike other metrics where the measurement is clear, brand development requires more complex research to assess it.
Market research that monitors consumer perceptions allows you to monitor and optimize brand strategy in real-time.
With the advancement of the internet and social media today, you can respond to consumer feedback more quickly. This will help maintain the quality of your interactions or build your brand engagement with your target audience.
3. Segmentation and buyer persona
Buyer personas help you develop the right products and communications with diverse audiences.
By understanding potential buyers and customers—including their motivations, needs, and problems—you can quickly track which aspects need improvement for optimal product marketing.
4. Testing marketing strategy and communication quality
Advertising campaigns can be very expensive. Without pre-testing, your ad budget can swell and run the risk of failing—not being accepted by your target audience.
By testing your campaign first, whether it’s the way the message is delivered or the advertising material, you can understand how consumers respond to your marketing communications before they go public.
That way, you still have enough time to make changes based on the feedback you received in the pilot phase.
5. Competitor analysis
Another important part of developing the right product and marketing communications is understanding the ins and outs of your competitors. See also how the consumer’s reception of their products and brands.
Don’t just try products and analyze competitors through their websites and social media, touch the consumers directly so that the research results are more accurate.
Understanding your competitors’ positions in the market allows you to identify their strengths and look for gaps that you can take advantage of. Also, check for existing weaknesses so that they can help your brand develop better products.
7 Benefits of Market Research
The following are the benefits that your business can experience by conducting efficient market research:
1. Help make the best decisions thanks to powerful insights
The quality of business development depends on the way decisions are made by the company’s management. By using market research, management can make business decisions based on the results that support their insights and experiences.
2. Obtain accurate and objective information
Market research provides objective and accurate information that will assist your business in dealing with potential risks that may arise in the future. This will play a big role in winning the competition with competitors.
3. Help determine market size
A market researcher can evaluate the size of the market that must be covered in terms of sales for the company to make a profit. This estimation is important so that the company’s resources are not wasted because they are not armed with the right calculations.
4. Help choose the best sales system
Choosing the best sales system in addition to reducing expenses, can also please the market because it is by consumer demand.
5. Simplify the process of studying consumer preferences
Market research helps to find out how consumer tastes change over time. That way, the products launched can adapt to these changes. Your business can determine the types of products to produce or sell based on the specific needs of consumers.
6. Facilitate the collection of public perceptions about the brand
In addition to generating product information, market research helps companies understand how customers perceive your brand.
7. Help analyze customer communication methods
Market research can help you develop guidelines on how to best communicate with clients and consumers. This is a crucial aspect because it plays a big role in maintaining their loyalty.
Types and Methods of Market Research
In business, there are two types of market research used: primary and secondary. Here is the explanation:
1. Primary Market Research
Primary market research is a combination of qualitative and quantitative research. It is the process by which companies go to end consumers directly to obtain data. However, the company can also hire a third/independent party to do this.
When conducting primary market research, one can gather two types of information: exploratory and specific.
Exploratory research is open-ended, where a problem is explored by asking open-ended questions in a detailed interview format. Usually, this is done with small sample groups.
While specific research is used to solve further problems identified by exploratory research.
As mentioned earlier, primary market research is a combination of qualitative market research and quantitative market research. Qualitative market research activities involve data collected through several commonly used qualitative research methods such as:
Focus groups usually consist of a small sample of people who respond to surveys sent to them. Information can be collected remotely, so it can be done without interacting directly with the sample. Submitted surveys are useful for gathering complex information.
As the name suggests, this method involves face-to-face interaction in an interview format. Researchers will ask a series of questions to collect information or data from respondents.
The questions are mostly open-ended and are asked expecting a response. This method relies heavily on the interviewer’s ability and experience to ask questions that prompt responses.
This type of in-depth research is carried out in the respondent’s natural environment. This method requires the interviewer to adapt to the respondent’s environment—for example, living in a remote city or village.
Geographical constraints can be a limiting factor in conducting this kind of research. Ethnographic research can last from a few days to several years.
2. Secondary Market Research
Secondary research can be obtained by checking indirect sources such as data from government agencies, media, chambers of commerce, and so on.
Secondary sources can be categorized into three types:
Public sources such as libraries can be a great way to collect information for free. Government libraries usually offer free services and researchers can document the information available.
Commercial sources are known to be reliable, but they need a special budget to spend. Researchers can access it through local newspapers, magazines, journals, electronic media, paid information websites,
Although not a popular source of information gathering, researchers need to consider it. Universities or educational institutions generally have a large number of independent research projects that can be utilized.
How to Do Market Research?
After knowing the types and methods of market research, here are the steps you can follow to put it into practice:
1. Define the Problem
Having a well-defined research subject will help you to ask questions.
These questions should be directed toward solving the problem and should be tailored to the project. Make sure the question is written clearly and the respondent understands it.
You can do tests with small groups to see if the questions asked are understandable and if they are enough to gain insights.
2. Determine Sample
To conduct market research, researchers need a representative sample that can be collected using one of the many sampling techniques. Look for a representative sample to minimize the margin of error.
There are two ways to get a representative sample:
This technique ensures that each member of the population will have an equal chance of being selected and included in the sample group.
You must ensure that the population data is up-to-date and has a good level of representation.
Here, you are trying to get a more balanced representative sample. This is done by knowing their demographic characteristics.
The sample size is very important but does not guarantee accuracy. More important than size, is representativeness.
3. Make a list of questions
Before collecting data, make sure you have made a list of questions to ask the target. Especially, if you want to do qualitative research or interviews.
The list of questions, of course, really depends on the problem you want to solve. However, as an illustration, you can also ask general questions. Especially at the beginning, when doing exploratory research.
- Can you introduce yourself?
- What are you looking for when using the product?
- How many products did you buy?
- What are your triggers, barriers, and buying habits?
- Is the way brand communication understandable?
- Do you have a positive sentiment towards beran?
- What are the advantages of the product?
- Is the product price appropriate?
- Do you like product packaging?
4. Collect data
Here you have to make sure that the data collection instrument has been filled out completely. Because, if they do not answer or answer but are incomplete, it will cause errors in the research. Proper data collection will prevent this.
5. Analyze the results
Each point of the market research process is interrelated with one another. If all of the above has worked well, you should know how to analyze it.
This data analysis will be compiled in a report which must also be written clearly so that it can be read by others without difficulty. A good report will affect effective decision-making made on that basis.
When the research has been carefully planned, the hypotheses have been adequately defined, and the data collection methods have worked properly, interpretation of the data is usually easy.
6. Create a Research Report
When presenting your results, you should focus on: what the company wants to achieve with this report. Arrange according to the priority of the goals to be achieved and in easy-to-understand language. How to?
Follow the inverted pyramid style to present results. In the beginning, answer the most important questions. Start with a conclusion, then provide supporting data.
7. Take Decisions
Market research helps companies to find out various information related to their business. For example, regarding consumer purchase intentions, market growth, and plans for new product launches. Now, based on the insights that have been obtained, the company can then make an objective decision.
Ready to Do Market Research for Your Product?
Market research involves gathering data to learn more about products, consumers, and other strategic issues so that companies can make measurable business decisions.
Since ancient times, market research has been an important part of any business strategy, whether B2B or B2C, large or small, new or old. Moreover, with the advancement of the internet and technology as it is today, data analysis has become a must to win the market.