Market research is an organized effort to gather information about
target markets
A target market, also known as serviceable obtainable market (SOM), is a group of customers within a business's serviceable available market at which a business aims its marketing efforts and resources. A target market is a subset of the total m ...
and customers: know about them, starting with who they are.
It is an important component of
business strategy
In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessmen ...
and a major factor in maintaining
competitiveness
In economics, competition is a scenario where different economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm ...
. Market research helps to identify and analyze the needs of the market, the market size and the competition. Its techniques encompass both
qualitative techniques such as focus groups, in-depth interviews, and ethnography, as well as
quantitative
Quantitative may refer to:
* Quantitative research, scientific investigation of quantitative properties
* Quantitative analysis (disambiguation)
* Quantitative verse, a metrical system in poetry
* Statistics, also known as quantitative analysis ...
techniques such as customer surveys, and analysis of secondary data.
It includes social and opinion research, and is the systematic gathering and interpretation of information about individuals or organizations using statistical and analytical methods and techniques of the applied social sciences to gain insight or support decision making.
Market research,
marketing research
Marketing research is the systematic gathering, recording, and analysis of qualitative and quantitative data about issues relating to marketing products and services. The goal is to identify and assess how changing elements of the marketing mix i ...
, and
marketing
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
are a sequence of
business activities; sometimes these are handled informally.
The field of ''marketing research'' is much older than that of ''market research''. Although both involve consumers, ''Marketing'' research is concerned specifically about marketing processes, such as advertising effectiveness and salesforce effectiveness, while ''market'' research is concerned specifically with markets and distribution.
Two explanations given for confusing ''Market research'' with ''Marketing research'' are the similarity of the terms and also that ''Market Research is a subset of Marketing Research''.
Further confusion exists because of
major companies with expertise and practices in both areas.
History
Although ''market research'' started to be conceptualized and put into formal practice during the 1930s as an offshoot of the advertising boom of the
Golden Age of radio
The Golden Age of Radio, also known as the old-time radio (OTR) era, was an era of radio in the United States where it was the dominant electronic home entertainment, entertainment medium. It began with the birth of commercial radio broadcastin ...
in the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
, this was based on 1920s work by
Daniel Starch Daniel Starch (1883–1979) was an American psychologist and marketing researcher. He is considered to be one of the pioneers of marketing and consumer research in the early 20th century.
Life
Starch received a BS in mathematics and psychology fro ...
. Starch "developed a theory that advertising had to be seen, read, believed, remembered, and most importantly, acted upon, in order to be considered effective."
[ Advertisers realized the significance of ]demographic
Demography () is the statistical study of populations, especially human beings.
Demographic analysis examines and measures the dimensions and dynamics of populations; it can cover whole societies or groups defined by criteria such as edu ...
s by the patterns in which they sponsored of different radio programs.
The Gallup Organization
Gallup, Inc. is an American analytics and advisory company based in Washington, D.C. Founded by George Gallup in 1935, the company became known for its public opinion polls conducted worldwide. Starting in the 1980s, Gallup transitioned its bu ...
helped invent the public opinion poll; today, "Market research is a way of paying for it."[
]
Market research for business/planning
Market research is a way of getting an overview of consumers' wants, needs and beliefs. It can also involve discovering how they act. The research can be used to determine how a product could be marketed. Peter Drucker
Peter Ferdinand Drucker (; ; November 19, 1909 – November 11, 2005) was an Austrian-American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business co ...
believed market research to be the quintessence of marketing.
Market research is a way that producers and the marketplace study the consumer and gather information about the consumers' needs.
There are two major types of market research: primary research, which is sub-divided into quantitative
Quantitative may refer to:
* Quantitative research, scientific investigation of quantitative properties
* Quantitative analysis (disambiguation)
* Quantitative verse, a metrical system in poetry
* Statistics, also known as quantitative analysis ...
and qualitative research, and secondary research
Secondary research involves the summary, collation and/or synthesis of existing research. Secondary research is contrasted with primary research in that primary research involves the generation of data, whereas secondary research uses primary res ...
.
Factors that can be investigated through market research include:
*Market information
Market intelligence (MI) is gathering and analyzing information relevant to a company's market - trends, competitor and customer (existing, lost and targeted) monitoring. It is a subtype of competitive intelligence (CI), which is data and infor ...
: Through market information one can know the prices of different commodities in the market, as well as the supply and demand situation. Market researchers have a wider role than previously recognized by helping their clients to understand social, technical, and even legal aspects of markets.
*Market segmentation
In marketing, market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as ''segments'') based on some type of shared characte ...
: Market segmentation is the division of the market or population into subgroups with similar motivations. It is widely used for segmenting on geographic differences, demographic differences (age, gender, ethnicity, etc.), technographic
Technographic segmentation for marketing management is a market research analysis tool used to identify and profile the characteristics and behaviors of consumers through the process of market segmentation. Traditionally market researchers focused ...
differences, psychographic
Psychographics is a qualitative methodology used to describe traits of humans on psychological attributes. Psychographics have been applied to the study of personality, values, opinions, attitudes, interests, and lifestyles. Two approaches to ...
differences, and differences in product use. For B2B segmentation firmographics
Firmographics (also known as ''emporographics'' or firm ''demographics'') are sets of characteristics to segment prospect organizations.
What demographics are to people, firmographics are to organizations. However, Webster (2005) suggested that th ...
is commonly used.
*Market trend
A market trend is a perceived tendency of financial markets to move in a particular direction over time. Analysts classify these trends as ''secular'' for long time-frames, ''primary'' for medium time-frames, and ''secondary'' for short time-fram ...
s: Market trends are the upward or downward movement of a market, during a period of time. Determining the market size may be more difficult if one is starting with a new innovation. In this case, you will have to derive the figures from the number of potential customers, or customer segments.
*SWOT analysis
SWOT analysis (or SWOT matrix) is a strategic planning and strategic management technique used to help a person or organization identify Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning. It ...
: SWOT is a written analysis of the Strengths, Weaknesses, Opportunities and Threats to a business entity. A SWOT may also be written up for the competition to understand how to develop the marketing and product mixes. The SWOT method helps to determine and also reassess strategies and analyze a business's processes.
*PEST analysis
In business analysis, PEST analysis ("political, economic, socio-cultural and technological") describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. It is part of an external envi ...
: PEST is an analysis about external environment . It includes a complete examine of a firm's Political, Economical, Social and Technological external factors, which may impact firms' objectives or profitability. They may become a benefit for the firm or harm its productivity.
*Brand health tracker: Brand tracking is way of continuously measuring the health of a brand, both in terms of consumers’ usage of it (i.e. Brand Funnel) and what they think about it. Brand health can be measured in a number of ways, such as brand awareness, brand equity, brand usage and brand loyalty.
Another factor that can be measured is marketing effectiveness
Marketing effectiveness is the measure of how effective a given marketer's go to market strategy is toward meeting the goal of maximizing their spending to achieve positive results in both the short- and long-term. It is also related to marketing ...
. This includes:
Data collection
"Rigorous sampling methodologies combined with high-quality data collection" is what the magazine ''Advertising Age
''Ad Age'' (known as ''Advertising Age'' until 2017) is a global media brand that publishes news, analysis, and data on marketing and media. Its namesake magazine was started as a broadsheet newspaper in Chicago in 1930. ''Ad Age'' appears in mul ...
'' considers the backbone of market research. Data collection can be done by observing customer behavior through in-situ studies or by processing e.g. log files, by interviewing customers, potential customers, stakeholders, or a sample of the general population. The data can be quantitative in nature (counting sales, clicks, eye-tracking) or qualitative (surveys, questionnaires, interviews, feedback). Aggregating, visualizing, and turning data into actionable insights is one of the major challenges of market research and today, text analytics
Text mining, also referred to as ''text data mining'', similar to text analytics, is the process of deriving high-quality information from text. It involves "the discovery by computer of new, previously unknown information, by automatically extract ...
affords market researches methods to process large amounts of qualitative information and turn it into quantitative data, which is easier to visualize and use for formalized decision making. Data collection can use larger audience samples than the few hundred or thousand typically used in market research. Also required is the (at least passive) cooperation of those being surveyed; trust is also helpful.
Some data collection is incentivized: a simple form is when those on the road contribute to traffic reporting
Traffic reporting is the near real-time distribution of information about road conditions such as traffic congestion, detours, and traffic collisions. The reports help drivers anticipate and avoid traffic problems. Traffic reports, especially in c ...
of which they are consumers. More complex is the relationship of consumer-to-business
Consumer-to-business (C2B) is a business model in which consumers (individuals) create value and businesses consume that value. For example, when a consumer writes reviews or when a consumer gives a useful idea for new product development then t ...
(C2B), which sometimes introduces reliability problems. Other data collection is to know more about the market, which is the purpose of market research.
International influence from the Internet
The international growth of available research both from and via the Internet has influenced a vast number of consumers and those from whom they make purchases. Although emerging global markets
International finance (also referred to as international monetary economics or international macroeconomics) is the branch of financial economics broadly concerned with monetary and macroeconomic interrelations between two or more countries. Inter ...
, such as China, Indonesia and Russia are still smaller than the US in B2B e-commerce
B2B e-commerce, short for business-to-business electronic commerce, is the sale of goods or services between businesses via an online sales portal. In general, it is used to improve the efficiency and effectiveness of a company's sales efforts. In ...
, their internet-fueled growth factor
A growth factor is a naturally occurring substance capable of stimulating cell proliferation, wound healing, and occasionally cellular differentiation. Usually it is a secreted protein or a steroid hormone. Growth factors are important for regu ...
is stimulated by product-enhancing websites, graphics, and content designed to attract corporate and consumer
A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. T ...
/B2C
Direct-to-consumer (DTC) or business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party retailers, wholesalers, or any other middlemen. Direct-to-consumer sales are usually tr ...
shoppers. Estimates for 2010 show between US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
400 billion and $600 billion in revenue was generated by this medium.
A report titled "Global B2C E-Commerce and Online Payment Market 2014" indicated a decrease in overall growth rates in North America and Western Europe, even as absolute growth numbers rose.
The UK Market Research Society (MRS) listed the top social media
Social media are interactive media technologies that facilitate the creation and sharing of information, ideas, interests, and other forms of expression through virtual communities and networks. While challenges to the definition of ''social medi ...
platforms primarily used by millennials
Millennials, also known as Generation Y or Gen Y, are the Western demographic cohort following Generation X and preceding Generation Z. Researchers and popular media use the early 1980s as starting birth years and the mid-1990s to early 2000 ...
are LinkedIn
LinkedIn () is an American business and employment-oriented online service that operates via websites and mobile apps. Launched on May 5, 2003, the platform is primarily used for professional networking and career development, and allows job se ...
, Facebook
Facebook is an online social media and social networking service owned by American company Meta Platforms. Founded in 2004 by Mark Zuckerberg with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dustin M ...
, YouTube
YouTube is a global online video platform, online video sharing and social media, social media platform headquartered in San Bruno, California. It was launched on February 14, 2005, by Steve Chen, Chad Hurley, and Jawed Karim. It is owned by ...
and Instagram
Instagram is a photo and video sharing social networking service owned by American company Meta Platforms. The app allows users to upload media that can be edited with filters and organized by hashtags and geographical tagging. Posts can ...
.
Research and market sectors
Regarding details for worldwide corporate market research, "most of them are never written about because they are the consumer research done by the country's manufacturers."
Market research data has loss prevention aspects; that less than 60 percent of all proposed modifications and new products are deemed failures.[ When information about the market is difficult to acquire, and the cost of "going ahead with the decision" to offer the product or service is affordable, the research cost may be more profitably used "to ensure that the new line got the advertising send-off it needed to have the best chances of succeeding."]
As measured in revenue, USA based Amazon
Amazon most often refers to:
* Amazons, a tribe of female warriors in Greek mythology
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon River, in South America
* Amazon (company), an American multinational technology c ...
is the worldwide E-Commerce leader.
Market research for the film industry
The film industry is an example where the importance of testing film content and marketing material involves:
# Concept testing, which evaluates reactions to a film idea and is fairly rare;
# Positioning studios, which analyze a script for marketing opportunities;
# Focus groups, which probe viewers' opinions about a film in small groups prior to release;
# Test screenings, which involve the previewing of films prior to theatrical release;
# Tracking studies, which gauge (often by telephone polling) an audience's awareness of a film on a weekly basis prior to and during theatrical release;
# Advertising testing, which measures responses to marketing materials such as trailers and television advertisements;
# Exit surveys, that measure audience reactions after seeing the film in the cinema.
Insights industry
Market research is an industry that overlaps with and is often referred to as the "insights” industry. However, the distinctive methods and techniques of market research not always correspond to the digital-first approach of insights vendors. The emergence of insights focusing on data analytics
Analytics is the systematic computational analysis of data or statistics. It is used for the discovery, interpretation, and communication of meaningful patterns in data. It also entails applying data patterns toward effective decision-making. It ...
rather than fieldwork is competing with market research for managerial attention and funding. Current research with market research practitioners shows two pressing concerns for the industry: online data commoditization and the increasing distance between market researchers and top management within client organizations. Both concerns boil down to the risk they perceived of market research becoming a legacy activity of the marketing department rather than the cornerstone of business strategy
In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessmen ...
.
Market research aims to produce so-called "actionable knowledge" that firms find useful in their operations:
# Framing managerial anomalies: an anomaly is a puzzle or a perplexing situation that the market research report is meant to solve.
# Loading instruments with meanings: translate observations of commonplace social practices into the marketing ontology.
# Signposting prescriptions: guide an intended reading to reduce interpretive flexibility.
Small businesses and nonprofits
Small organizations and non-profits can derive needed information by observing the environment of their location. Small scale surveys and focus groups are low cost ways to gather information from potential and existing customers and donors. While secondary data (statistics, demographics, etc.) is available to the public in libraries or on the internet, primary sources, done well, can be quite valuable: talking for an hour each, to twelve people, two apiece from six potential clients, can "get inside their minds.. get a feel for their needs, wants and pain. You can’t get that from a questionnaire."
See also
* Marketing Research Institute International
* Mystery shopping
Mystery shopping (related terms: mystery shopper, mystery consumer, mystery research, secret shopper and secret shopping and auditor) is a method used by marketing research companies and organizations that wish to measure quality of sales and s ...
* Nielsen ratings
Nielsen Media Research (NMR) is an American firm that measures media audiences, including television, radio, theatre, films (via the AMC Theatres MAP program), and newspapers. Headquartered in New York City, it is best known for the Nielsen rat ...
References
External links
*Small Business Administration
The United States Small Business Administration (SBA) is an independent agency of the United States government that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and stren ...
Market research and competitive analysis
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Business process
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