Market research refers to the process of gathering and analyzing information regarding various market dynamics for the purpose of solving business problems (Hamersveld & Bont 2008). Businesses collect information on various market aspects that affect their operations. The process involves several steps namely specification of information, development of research methods, collection of information, analysis of data, and evaluation of findings and their implications on business operations (Hamersveld & Bont 2008). Organizations conduct market research in order to indentify new customers, develop effective marketing and growth strategies, solve existing problems, improve customer relationships and satisfaction, make preparations for expansion, and identify new opportunities (Wiid & Diggines 2010).
In addition, research helps firms to stay focused on their lines of specialization, improve decision-making processes, and provide better customer services (Wiid & Diggines 2010). There are two types of marketing research namely primary and secondary research. This report will discuss the importance of market research to businesses, the various types of research, and ways in which good market research can be applied in the development of marketing strategies.
Types of marketing research
There are two major types of research methods namely primary research and secondary research (Hamersveld & Bont 2008). The choice of the method to use depends on the technique that a researcher wishes to use to collect information. On the other hand, the type of information to be collected can be either qualitative or quantitative.
This research method involves the collection of information from people using methods such as surveys, questionnaires, face-to-face surveys, telephone interviews, focus groups, and direct observations (Hamersveld & Bont 2008). The method gives researchers an opportunity to ask specific questions that apply to their businesses. The information gathered is highly valuable and can be used for various purposes. Primary research is time consuming and costly.
Secondary research involves the collection of existing information from sources that include the internet, sales reports, government publications, customer databases, libraries, market research reports, organizational data surveys, and financial reports (Wiid & Diggines 2010). It is less time-consuming and cheap when compared to primary research. However, the information gathered might be limited and insufficient. This method is preferred because the collection and analysis processes are fast.
Qualitative and quantitative research
Market research also involves qualitative and quantitative research. Qualitative research includes information such as views, attitudes, and perceptions, and aids in understanding customers’ interests, needs, and purchase habits (Hamersveld & Bont 2008). It applies methods such as focus groups, reviews, and conversations. On the other hand, quantitative research involves the collection of numerical data such as sales figures, financial trends, frequency of customer return, and sales volumes of specific products (Wiid & Diggines 2010). This approach is applied by businesses to evaluate market size, identify new areas of expansion, and determine their performance in certain market segments.
The importance of research to the success of a business
Businesses conduct research constantly in order to maintain a competitive advantage, adjust to changes in market trends, and solve business problems that derail growth (Wiid & Diggines 2010). Market research is important to the success of a business because it helps the business understand existing customers, identify potential customers, evaluate and solve business problems, discover new business opportunities, and set pragmatic goals. In addition, it helps businesses focus on their most important services and products and thus enhance organizational success (Wiid & Diggines 2010). Research reveals what customers want and how they want it. Customer information augments efforts to channel time and resources on important products and business operations that are most critical to organizational success.
Market research enhances the understanding of existing customers and provides insights on ways to improve the quality of services and products (Hamersveld & Bont 2008). For instance, analysis of information supplies reasons why customers prefer the products of a certain company over those of competitors and highlights the improvements they would like to see implemented. In addition, it includes opinions regarding prices, frequency of purchase, the forces that control buying decisions, and the quality of customer experiences (Wiid & Diggines 2010).
After collecting this information, a business can use it to improve its services/products, set realistic goals, and develop effective marketing and growth strategies. For instance, if an organization deduces from market research that the purchase frequency of customers is low because of unavailability of products and unreasonably high prices, then the firm can use that insight to develop strategies on how to set prices that will increase purchase frequency. In addition, the business can use the information to develop effective marketing strategies to improve the distribution and placement of products in the market. Market research is also important for business success because it helps in examining and solving problems (Wiid & Diggines 2010).
Common problems that affect business success include low sales volumes, new market entrants, and stiff competition. Market research facilitates the identification of organizational problems and potential solutions. For example, if a business experiences low sales volumes, market research can be used to identify the cause of the problem that could be decline in brand awareness and introduction of a new and low-priced product. This problem can be solved by improving brand awareness through advertising and setting affordable prices that attract customers. Finally, market research helps businesses identify new opportunities (Wiid & Diggines 2010). Research can be to identify an un-serviced market segment or a need that needs to be addressed. The insights are then used to create strategies to address the need or service the un-serviced market segment.
Innovation is one of the most important factors that determine the success of a business because of stiff competition and the need for high-quality products and services. Conducting market research encourages companies to innovate only in areas that have high growth opportunities (Hamersveld & Bont 2008).
In addition, it helps them develop products and services that address the needs, desires, and wants of customers directly. Stiff competition is one of the challenges that derail the attainment of business success because it constricts the market share of a business and reduces its customers. Market research provides information that helps businesses to gain competitive advantage and thus compete effectively in the market (Wiid & Diggines 2010).
For instance, it provides information that includes the price of the competitor’s products/services and ways to improve the product/service value in order to attract more customers. Understanding the activities and strategies of competitors is crucial to any business. Research insights reveal the competitor’s marketing strategies, sale volumes, and product pricing (Wiid & Diggines 2010). This information can be used to improve brand awareness and product placement in the market. Research is also important because it provides useful information on market changes such as new entrants and demographic shifts. This enables businesses to innovate and implement the necessary changes that will improve their operations.
How good market research can help a business to develop appropriate marketing strategies
A marketing strategy aims to address the needs and desires of customers based on the market segments in which they belong. In order to understand the needs of customers, it is necessary to carry out market research (Birn, 2004). After conducting market research, a business develops a marketing strategy that utilizes the strengths of a specific product or service to attract customers. For instance, if a certain customer segment (teenagers) needs high quality mobile phones, any marketing strategy used should only focus on the quality of the mobile products that the business sells. Market research enables a business to conduct a SWOT analysis that is necessary in the development of appropriate marketing strategies (Birn, 2004).
The most important goal of conducting market research is to provide a business with information that will aid in making better business decisions. Businesses use research to develop appropriate marketing strategies by gaining insights on how to improve their marketing mix. The 4Ps of a marketing mix include product, price, placement, and promotion (Birn, 2004). The aforementioned marketing mix concept was developed by Edmund Jerome McCarthy in the 1960s.
A business can use research finding to improve its products and services based on the needs, wants, and interests of customers. In that regard, the function and appearance of the product is emphasised. Market research allows businesses to set appropriate prices for products and services by providing information that includes competitors’ prices, customers’ preferred prices, and price ranges guarantee acceptable profit margins (Birn, 2004). The success of marketing strategies depends on the effectiveness of product placement in the market. Research helps businesses determine the best methods of distributing their products (Birn, 2004).
For, instance, they can either sell their products in retail, wholesale, or online outlets based on their research findings. Finally, market studies enable businesses to identify the best ways of reaching specific market segments (Birn, 2004). Market segments include teenagers, families, students, professionals, children, men, and women. The information collected determines the best strategies to use in advertising. A business can use social media to target teenagers and television to target families. The promotion method selected depends on the target segment. The 4Ps concept can be used to introduce a new product or service in the market as well as evaluate the effectiveness of existing marketing strategies.
Market research is an important aspect in any business. It involves the collection and analysis of information that is relevant in the improvement of business operations. Market research benefits businesses in several ways. It helps in the development of effective strategies, facilitates the examination and development of solutions to business problems, aids in understanding existing customers and identification of potential customers, and plays a key role in business expansion. In addition, it helps in the identification of new opportunities and development of effective marketing strategies. Businesses need to conduct market research continually in order to gain competitive advantage in the market and gain insights regarding the various market dynamics that affect their operations.
Birn, R 2004, The Effective Use of Market Research: How to Drive and Focus Better Business Decisions, Kogan Page Publishers, New York. Web.
Hamersveld, M & Bont, C 2008, Market Research Handbook, New York, John Wiley & Sons, New York. Web.
Wiid, J, & Diggines, C 2010, Marketing Research, Juta and Company Ltd, New York. Web.