Market Research Business: Definition, Types, and Examples
Market research is the process of gathering information about a target market, customers, and competitors to inform business decisions. It involves systematically collecting and analyzing qualitative and quantitative data to understand customer preferences, assess market demand, and evaluate marketing strategies.
Market research helps companies identify opportunities, minimize risks, and develop effective marketing plans. 60% of marketers say market research is "very important" to their overall marketing strategy.
Why is Market Research Important?
Market research provides valuable insights that help companies:
- Understand target customers' needs, preferences, and behaviors
- Assess market demand and growth potential for products/services
- Identify market trends, opportunities, and threats
- Benchmark against competitors
- Develop effective marketing strategies and campaigns
- Make data-driven business decisions
- Mitigate risks when launching new products or entering new markets
73% of companies use market research to make informed business decisions. Brands that conduct frequent market research grow 76% faster than brands that don't.
Primary vs. Secondary Market Research
There are two main types of market research: primary research and secondary research.
Primary Research
Primary research involves collecting original data directly from target customers or markets. Methods include:
- Surveys and questionnaires
- Focus groups and interviews
- Observation and field trials
- Experiments and product testing
Primary research provides specific insights tailored to the company's unique questions and needs. However, it can be time-consuming and expensive.
Secondary Research
Secondary research uses existing, publicly available data that was originally collected by others. Sources include:
- Government databases and census data
- Industry reports and trade publications
- Academic research and market studies
- Internal company data (e.g. sales reports, website analytics)
Secondary research is faster and less expensive than primary research. However, the data may be less specific to the company's needs.
Qualitative vs. Quantitative Market Research
Market research can also be categorized as qualitative or quantitative.
Qualitative Research
Qualitative research gathers non-numerical data to understand customer opinions, motivations, and experiences. Methods include:
- Focus groups
- In-depth interviews
- Observational research
- Open-ended survey questions
Qualitative research provides rich, descriptive insights but is not statistically representative of the entire market. 28% of marketers use qualitative research.
Quantitative Research
Quantitative research collects numerical, measurable data from a large sample size to identify statistically significant trends. Methods include:
- Surveys and polls
- Transactional data analysis
- Web analytics
- A/B testing and experiments
Quantitative research is more structured and objective than qualitative research. 54% of marketers use quantitative research.
Other Types of Market Research
Some other common types of market research include:
Brand Research
Brand research evaluates brand awareness, perception, and equity among target audiences. 46% of marketers conduct brand research.
Customer Satisfaction Research
Customer satisfaction research measures how well a company's products and services meet or exceed customer expectations. 57% of companies measure customer satisfaction.
Competitive Analysis
Competitive analysis researches competitor strengths, weaknesses, strategies, and market positioning to identify opportunities for differentiation. 59% of marketers research their competition.
Product Research
Product research tests product concepts, features, packaging, and pricing to optimize the product development process. 56% of companies do product research before launching.
The Market Research Process
The market research process typically includes the following steps:
- Define the research problem and objectives
- Develop the research plan
- Collect data using primary and/or secondary research methods
- Analyze the data to identify insights and trends
- Present the findings in a clear, actionable format
- Use the learnings to inform business decisions and strategies
Market Research Examples
Some examples of how companies use market research:
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Starbucks used focus groups and surveys to understand customer preferences before launching new products like the Pumpkin Spice Latte, which became their most popular seasonal beverage.
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Apple's team acts as primary market researchers, envisioning products they would want as consumers, like the iPod. This approach led to innovative products that revolutionized multiple industries.
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Dove's "Campaign for Real Beauty" was inspired by market research that found only 2% of women considered themselves beautiful. Dove used "real women" in ads to successfully connect with customers and increase sales.
Conclusion
Market research is an essential tool for companies to understand their customers, competitors, and market landscapes. By systematically gathering and analyzing data, businesses can make smarter decisions, develop customer-centric strategies, and drive growth. While there are many different types and methods of market research, the fundamental goal remains the same: to reduce risk and maximize success by deeply understanding the market.