The main aim of any research work is to provide answers to generally asked questions and to add to the body of existing knowledge. Research is a key instrument used in nearly all disciplines to gather information. Therefore, market research is all about collecting market information to assist in making key business decisions (Kent, 2006, p. 15). However, market research on its own cannot guarantee business success. Instead, business success hinges on the intelligent application of the market research information. For this reason, the most important thing is how the information gathered through market research is utilized (Malhotra, 2004, p. 3).
According to Cravens and Piercy (2006, p. 6), market research helps in the formulation of marketing strategies. They define marketing strategies as the incorporation of a strategic way of thinking in the field of marketing. In other words, marketing strategy is the process that enables an organization to focus its resources to greater opportunities to enhance sales and attain competitive advantage. Marketing strategies are normally based on the concept of consumer satisfaction. In such case, it defines how the organization engages with its customers, makes plans and handles its competitors (Cravens & Piercy, 2006, p. 8).
Given the fact that customers are the major source of the company’s income, marketing strategy is highly linked to sales. The main aim of marketing strategy is to align marketing with business goals and objectives (Kriemadis & Terzoudis, 2007, p. 30). Marketing research also acts as a foundation for marketing as a whole. For that reason, marketing research is the basis of all the business efforts aimed at satisfying market needs and accomplishing business goals (McDonald, 2002, p. 13).
This report will analyze and evaluate the use of market research in business. The discussion will include the role of market research in business success and different types of market research, giving clear examples to support the statements. The report will also evaluate the significance of market research in developing marketing strategies. The analysis will involve the exploration of different concepts and key arguments between different authors.
Types of Market Research
There are two fundamental types of market research, that is, secondary and primary market research (Malhotra, 2004, p. 32). Secondary market research is based on the information available in secondary sources. Secondary sources are basically studies that have already been carried out either by the state agencies or private organizations, for instance, the National Chamber of Commerce. Secondary sources if anything is very simple to find and to a great extent free of charge or less costly. Secondary market research can be found on the internet, at local libraries and the mass media.
The disadvantage of secondary market research is that it is not adapted to the specific needs of a business. For this reason, it may not be as helpful as primary market research. For instance, secondary market research may illustrate the amount of money consumers spent on a particular product in the previous year, but not the amount of money they are willing to spend on the company’s product (Malhotra, 2004, p. 33).
On the contrary, primary market research is adapted to the specific needs of the company. It simply involves collecting information from the ground, and this can be carried out by a company on its own through the research and development department or it can contract another company to do it on its behalf (Malhotra, 2004, p. 33). Primary market research provides a company with an opportunity to explore a matter of particular interest to the business, assess demand for a new or existing product, evaluates response to company’s promotional activities, discover the amount consumers are willing to pay for a particular product, and many more (Malhotra, 2004, p. 34).
Primary research delivers results that are tailored to a business entity, which is particularly important for a business launching a new product or service into the market. In addition, primary market research normally employs statistical tools and techniques to collect market information. One of the main disadvantages of primary research is the cost involved in collecting data. It can also be time-consuming. However, the increasing number of online research tools has significantly reduced the cost of carrying out primary market research (Malhotra, 2004, p. 35).
Intelligent and visionary businessmen normally carry out secondary research first before conducting primary research. For instance, a business person planning to expand his/her business and wants more information about the target market, he/she can acquire fundamental information such as spending patterns, general income, and demographic characteristics from secondary research. This individual can then conduct primary research to assess consumers’ response to the product. In a nutshell, secondary market research lays the foundation, whereas primary market research seals in the cracks. By using both primary and secondary research, an individual or company can get a balanced perspective of the market.
The need for Market Research in Business
Understanding consumers, and more significantly, recognizing them, what they desire in terms of goods and services, how and where they want the goods and services availed, and at what price they are willing to buy the goods or services are very important during the decision-making process (Kent, 2006, p. 16). However, due to globalization and very intricate business structures and systems, there are always some form of detachment between the business executives and the consumers who are generally scattered. As a result, this makes it very difficult for business executives to comprehend the needs and wants of the consumers (Kent, 2006, p. 18).
According to Malhotra (2004, p. 44), companies all over the world more often than not lose nearly 50 percent of their clients after every half a decade. However, the management often fails to learn from these defections. In addition, more than three-quarters of the companies fail to meet consumers’ needs since their discernment of what the consumers want is distant from the truth. It is not because they are not concerned with the consumers’ needs, but they often attempt to achieve the wrong end by weird means. Therefore, market research is usually conducted to establish the facts on the ground, which consequently help in making appropriate decisions (Malhotra, 2004, p. 45).
Market research can assist organizations in the decision-making process in two ways, namely: problem identification and problem-solving (Malhotra, 2004, p. 45). Categorizing market research into problem identification market research and problem-solving market research helps our comprehension from a theoretical point of view, as well as a practical perspective. However, there are no unassailable divisions between the two categories of market research (Malhotra, 2004, p. 46).
A market research project may incorporate the two categories at the same time. For instance, a market research focusing on consumers’ preference of Indian tea in the European market provided the following outcomes:
- a study of market trends, as well as international production of tea, and the increasing significance of Indian tea in comparison with tea from other countries (problem identification research)
- the principal benefits of tea among consumers as per their demographics (problem solving research)
- profile of different countries exporting tea to the European market (problem identification research),
- consumers preferences in purchasing tea and associated goods (problem solving research) (McDonald, 2002, p. 67).
This example shows that market research can incorporate both problem identification and problem-solving study.
The significance of market research in the development of marketing strategies
To clearly comprehend what is happening in the market, it is very important to be acquainted with the market trends, as well as what the rivals are doing to increase their revenue and market share. Market research is crucial in making very important decisions. With marketing being a philosophy where the whole firm’s energy and resources are geared towards consumer satisfaction, marketing research provides the means through which consumer wants and needs may be determined and communicated effectively. In other words, market research helps in the formulation of marketing strategies. In addition, information gathered through market research can be used to screen and adjust the elements of marketing strategy (Cravens & Piercy, 2006, p. 9).
According to Kotler (2001, p. 4), marketing research is a vital tool for marketing management, market segmentation, and market orientation, which are key components of marketing strategy. Kotler (2001, p. 5) defines marketing management as the “art of selling products”. The aim of marketing management is to collect information relating to the tastes and preferences of consumers and producing goods that satisfy consumer needs. On the other hand, market segmentation is the classification of consumers as per their behavioral and economic characteristics. A company can create a market offering for a given market segment. For instance, the Volvo Company sells its automobiles to customers who value automobile safety. Lastly, marketing orientation is a process of creating market information relating to the present and future needs of consumers (Kotler, 2001, p. 5).
Marketing research is an important component of the marketing process. Marketing research provides crucial information that aids in the formulation of marketing strategies. The information gathered through market research can also be used to screen and fine-tune the existing marketing strategy. Market research can assist organizations in the decision-making process in two ways, namely: problem identification and problem-solving. Most marketing research projects normally incorporate the two. In summary, marketing research keeps the organization informed about the market dynamics, thus aids in making informed decisions.
Cravens, D & Piercy, N 2006, Strategic marketing, McGraw Hill, Boston. Web.
Kent, R 2006, Marketing Research: Approaches, Methods and applications in Europe, Thompson Publishers, London. Web.
Kotler, P 2001, Kotler on Marketing: How to Create, Win and Dominate Markets, Free Press, New York. Web.
Kriemadis, T & Terzoudis, C 2007, ‘Strategic Marketing Planning in the Sport Sector’, Sport Management International Journal, vol. 3, no.1, pp. 27-45. Web.
Malhotra, N 2004, Market Research: An Applied Orientation, Pearson Education, New Jersey. Web.
McDonald, M H 2002, Marketing Plans: How to Prepare them; How to Use Them, 5th ed., Prentice Hall, London. Web.