Market research

What is Market research?

Market research is the process of gathering, analyzing, and interpreting information about a market. Market Research can either be qualitative or quantitative. Good market research enables a firm to understand and satisfy the customer’s needs.

Example: A toy manufacturer identifying the number of boys living in a city

Why is market research important?

Most firms pay close attention to Market Research, it has several advantages:

• Enables a firm to ensure that their products would be successful in the market and would be able to generate significant profits.
• Market research aids a firm in understanding the market, the competition, and the prices of competitive products and therefore determining an effective price for their products.
• Market research helps a business make the right decisions such as the number of units manufactured and the location of retail when planning the launch and sale of a product or service

Product-oriented and market-orientated businesses

Business can be classified based on how they tackle market research:

1. Product-oriented business: A product-oriented business is one whose main objective is designing and producing the product. These businesses produce the product first and then find a market to sell them.
2. Market-orientated business: A market-orientated business is one whose objective is to produce a product or service that a customer desires. These businesses perform market research to identify gaps in the market and produce these products/services.

What is a marketing budget?

A marketing budget is a financial plan for the marketing of a product or product range for some specified time. It specifies how much money is available to market the product or range so that the marketing department knows how much it may spend.

Market research methods

Market research methods can be classified into primary research and secondary research.

Primary Research

What is primary research?

Primary Research: Also known as field research, these methods of market research involve the collection and collation of original data. It involves directly collecting information from the community(existing and potential customers). Examples of primary research methods include questionnaires, focus groups, and interviews.

1. Questionnaire: A questionnaire is a set of questions to be answered as a means of collecting data for market research

2. Online surveys: Online surveys
3. Interviews: Interviews involve asking individuals a series of questions, often face to face.

4. Focus groups: A focus group is a group of people who are representatives of the target market who agree to provide information about a particular product or spending patterns over time. These groups often test the products before their launch to provide feedback.

What is sampling?

Sampling is the group of people who are selected to respond to a market research exercise such as a questionnaire. Samples can either be formed as a quota or randomly.

A random sample is when people are selected at random as a source of information for market research.

A quota sample is when people are selected on the basis of certain characteristics as a source of information for market research.

Secondary Research

What is Secondary Research?

Secondary research, also known as desk research is the collection of existing research that has been made and collated by others. Second-hand information is collected from published sources.

Sources of Secondary data:

Secondary data can either be taken from internal sources or external sources.

Data collected from a business’s own records is said to come from an internal source. These sources include:

1. Sales department records, pricing data,  customer records, sales reports
2. Finance department
3. Customer service department

Data collected from outside the business is said to come from an external source. These sources include:

1. Government statistics– information about population(age, gender) and structure of the economy
2. Newspapers– articles on economic conditions forecasting future economic patterns.
3. Trade associations– reports and other pieces of information gathered by these organizations can describe the industry.
4. Market research agencies– agencies who are hired to carry out relevant market research and provide detailed reports
5. Online sources– have a wide range of opinions, articles, and reports on companies, government statistics, newspapers, and blogs.

Accuracy of Secondary Information

As secondary information has not been collected by the company itself, its accuracy and reliability can often be questioned, several factors can affect the accuracy of secondary market research data, they are:

1. The degree of care with which the sample was drawn up, its size, and the people selected
2. The question phrasing and the honesty of the response
3. Who carried out the research
4. The presence of biases in the source(articles are known for being bias)
5. Age of information(the older the information, the less relevant it will be to use today)

Data Presentation

Raw data collected from market research needs to be properly collected and processed to make it easier to interpret. Data (qualitative or quantitative) can be organized into graphs and other forms to make it easier to analyze. They are:

1. A table/tally chart– is used to record data (raw data) in its original form. Data collection is easy, but interpretation is often difficult.
2. A chart– numeric data is often represented as a chart. It shows the total figures for each piece of data or the proportion of each subcategory in terms of the whole number.

A graph– a graph is often used to represent the relationship between two sets of data, and how one affects the other with two variables.