4.4 Market Research

Market Research - Activities designed to discover the opinions, beliefs and preferences of potential and existing customers. It helps the business identify and anticipate the wants and needs of customers, as they look for market trends and opportunities for growth. There are two main methods of conducting market research: primary research and secondary research.

The Role of Market Research

Adaptation - Businesses that adapt the fastest to changing consumer trends will reap the greatest benefits with a first mover advantage. In highly competitive industries, it is imperative that businesses stay ahead of competition and identify and prepare for a potential change in trends whenever possible.

Marketing Mix - Assessing customer reactions and preferences will enable the business to better tailor its marketing mix to its target market segment. Knowledge like the most efficient form of promotion, ATL or BTL techniques, or whether a proposed USP will attract more customers, can help the business identify the strengths and weaknesses of its marketing mix.

Primary Research - Market research that involves gathering new data first-hand for a specific purpose. It is used to gather data and information directly from the target market segment to identify their buying patterns and anticipate changes in market trends.

• Survey / Questionnaire - Document containing a series of questions used to collect data for a specific purpose. Surveys often use both closed and open-ended questions to gather quantitative and qualitative data respectively; open-ended questions allow the customer to express their opinions in depth. giving the researcher has a better understanding of the mindset of a customer.
• Interviews - One-to-one discussions with customers or the target research group to investigate their personal circumstances and opinions. Interviews allow researchers to adapt questions based on the response of the interviewee, enabling the researcher to probe deeper into detail about customer preferences and desires.
• Focus Groups - Forming small discussion groups to gain insight into the attitudes and behaviour of respondents. By using a focus group, detailed questions can be asked to strike an insightful discussion among participants that can reveal valuable information for the organisation.
• Observations - Watching how people behave and respond in different situations, often using surveillance filming or in person. Organisations tend to observe customer reactions to a new marketing strategy to determine its effectiveness. It allows businesses to record customers’ actual behaviours, rather than what they say they would do.

Advantages

Precise - The organisation conducting primary research will be able to address specific issues as it is in control of the process, and can streamline the project to gather the exact information it desires. 

Up-to-date - The business is aware of how relevant their research is in the current business environment and the situation of the business. Secondary data tends to have been researched out of date from current trends and may not be suited to the context of the business.

Proprietary Issues - Businesses who conduct their own primary research can keep their data undisclosed and out of reach from its competitors, who’ll be at a disadvantage if the business manages to identify something important.

Disadvantages

High Cost - Time, effort and financial investment are required for primary research; meaning there will be less for other more essential business operations.

Secondary Research - Collection of second-hand data and information that already exists. Second-hand data consists of internal data such as historical sales records, and external data such as academic journals, government publications, and market analyses done by other organisations.

• Market Analysis - Reveals the characteristics and product perceptions of the target market segment, often used to measure how well a business is doing compared with its rivals. Businesses often gather sources from the publications of specialist market research firms, and annual reports of competitors.
• Academic Journals - Periodical publications from educational and research institutions, uncovering data and information from industry experts and academics. The purpose is to distribute and share theoretical work and market research findings, rather than to gain profit, so businesses can purchase access to journals for a reasonable cost.‍
• Media Articles - The general media can contain valuable data and information. Businesses can foresee potential opportunities for growth through the trends and viral articles on social media, television documentaries and news media.

Marketers need to consider the ethical implications of their market research techniques, particularly crossing the boundary into an invasion of privacy. News of a breach of ethics in market research, such as Facebook gathering and using user data without permission, will lead to heavy public criticism that will tarnish the brand image and corporate reputation of the organisation, threatening its survival. 

Market research also needs to be systematic, consistent and unbiased. Using leading questions in interviews or questionnaires to garner a specific and desired response from customers will hinder the legitimacy of findings, leaving the business unaware of its weaknesses.

Qualitative - Market research getting non-numerical answers and opinions from respondents in order to gain a more insightful understanding of the perceptions of the target research group. The two main ways of gathering qualitative research is through focus groups and interviews.

Quantitative - Market research getting factual and measurable information rather than people’s opinions, using a more statistical approach to analysing data. The main way to gather quantitative data is through closed questions on surveys and questionnaires, where respondents choose from an array of answers.

Qualitative research will disclose the driving and restraining forces behind the actions and behaviours of the target group, enabling the organisation to gain a greater understanding of how to meet their wants and needs. However, due to the depth of qualitative research, interpreting the findings and finding common trends from a large pool of respondents is very time-consuming. Quantitative research will not go as in-depth as qualitative research to understand the mindset and perceptions of the target group, but it is easier and quicker to collate and analyse a large number of responses in order to find clear trends.

Quota Sampling - An equal number of people from each target market segment is selected for market research. It enables the organisation to gather a conclusion that is more representative of the entire population, especially of minorities.

Random Sampling - An indiscriminate and chance selection of people for research, whereby everyone in the population has an equal chance of being selected.

Stratified Sampling - Selection of people from each target market segment proportional to the size of the segment. This method enables research to be more accurate in its representation of the population, as it accounts for diversity but also the significance of each segment.

Cluster Sampling - Random selection of people within several geographical areas, used to reduce time and effort necessary for research.

Snowballing - Research carried out with individuals, who then suggest other people for the interview, who repeat the cycle to increase the sample size exponentially. It enables the organisation to gather a large pool of responses easily, sacrificing control over diversity of respondents in doing so.

Convenience Sampling - Selecting people who are the easiest to reach, used to reduce time and effort necessary for research.

Non-Sampling Errors - Human error in market research, such as incorrectly analysing data gathered or making mistakes in recording of data. It also includes mistakes on the side of respondents, who may intentionally distort results with dishonest answers.

Sampling Errors - Mistakes made in the design of market research, such as a sample size or sampling method that does not attain results that represents the view of the target market segment, or bias in the research that intentionally skews results.