What is Market Research? Definition of Market Research, Market Research Meaning and Concept
Market research is a process used to solve problems between the company and its markets, through the search and analysis of information.
So, by referring to research as a process, what we mean is that a series of steps must be followed, systematically in order to collect information, analyze it and be able to make decisions about how we are going to act.
For this reason, companies must continually carry out market research processes, since this allows them to know how to respond to changes in tastes, preferences and the behavior of the market in general.
Types of market research
Then in marketing, market research can be divided into two categories:
1. Academic research
Academic research is also called scientific research, because it is carried out to obtain information on topics of transcendental interest for the entire society related to the subject of marketing.
Therefore, this implies that it is not limited to the problems that a single company can face. That is, it analyzes problems of general interest and seeks to find long-term solutions.
Consequently, this research is produced by specialized research agencies or by universities. The topics investigated in general help to better understand consumer and market behavior in a universal way.
This information is published in specialized media and is available to everyone. For this reason, a fundamental characteristic is that the information must be analyzed with complete impartiality and must be obtained with great scientific rigor.
2. Professional research
In contrast, professional research is generally conducted by a company's marketing research department, by a consulting firm, or by a company dedicated to conducting market research.
Above all, it is used to solve specific problems of a particular company, they are usually problems that require a solution in the short term and for that reason it is called practical research.
Without a doubt, this information is only of interest to the company conducting the market study. For that reason, the data obtained is jealously guarded and is not shared with other companies, since this would mean giving arms to the competition, since they would know our strengths and weaknesses.
In reality, the success of this form of research is to do it in the corresponding time and using the resources appropriately, because it can be very expensive; if the information is not used profitably and appropriately.
Steps of a market research
The steps for conducting marketing research can be summarized as follows:
1. Statement of the problem
Now the problem statement is one of the fundamental steps to do a good market research, since if it is not clearly defined what we want to solve or investigate, the investigation can be a total failure.
For example, if a product's market share is declining, the problem can be defined by asking a question: Why is product X losing market share?
2. Preliminary investigation
Preliminary research is also a type of exploratory research that seeks to find answers with the data available within the company or with the people who work or have contact with it.
Then, continuing with the problem definition question: Why is product X losing market share? Some answers could be the high price of the product, the loss of quality, the lack of innovation, among others.
Of course, these answers provide us with some clues as to how we can develop and focus the marketing research process.
3. Formulation of hypotheses
A hypothesis is the provisional explanation of a problem, through the relationship of variables, one dependent and the other independent. The answers obtained in the preliminary investigation help to formulate the hypotheses.
A hypothesis of the previous case could be formulated as follows:
- "The cause of the low participation of product X is its high price."
- The dependent variable is low participation and the independent variable is its high price.
The hypotheses are the basis on which the whole topic of the investigation must turn, because at the end of this process they must be verified or rejected.
4. Data collection
This step consists of looking for the necessary information to validate the hypotheses, first looking for secondary sources or information that is already available to be consulted and is available to anyone.
Therefore, if this information is not enough, a search for primary data is carried out, starting with the determination of the number of people to be investigated.
to. Choose the sample
If a census is carried out, 100% of the population is investigated , and if we only take a part of the population, a sample is selected that is representative of the market we want to investigate.
b. Choose research instruments
Then the instruments to be used in the collection of information are defined and designed.
They are a set of previously elaborated questions that are asked to an interviewee and can be divided into four types.
- Surveys by questionnaires: They are of individual application and closed response.
- In-depth interview: They are of individual application and open response.
- Focus groups: They are of group application and open response.
- Nominal groups: They are of group application and closed response.
This method allows you to obtain information based on a real situation. To be effective it has to be totally impartial.
A situation is generated and the behavior of the consumer or the market is observed.
5. Selection, entry and analysis of data
Immediately after having the data, proceed as follows:
to. Data selection
In the selection of data, those that have been obtained incorrectly, the data that are incomplete and those that have been poorly understood are excluded, due to the way in which the questions are written.
b. Data entry
As soon as the data have been selected, they are entered into the computer and descriptive statistics are used to process and organize them.
c. Analysis of results
This is the crucial part of the investigation, because with the data obtained and its analysis, decisions are made to know how to act and find the appropriate solution to the problems.
6. Preparation of the market research report
The market research report is presented in a simple and clear manner so that anyone who reads it can understand it. The parts that an investigation report should bring are the following.
- Description of methodology
- Description of data
- Analysis of data
History of market research
Although questionnaires began to be used in the 19th century, market research did not have a formal beginning until the 20th century, between 1910 and 1920.
The most representative milestone in the beginning of marketing research was when Charles Carlin of Curtis Publishing Group founded a marketing research department for the first time in 1911. This served to encourage other companies to do the same.
In the following decades, more tools were implemented in market research, such as new sampling techniques, as well as quantitative and qualitative analysis instruments. Finally, with the arrival of the Internet, the possibility of massively collecting and analyzing data opens, giving these studies greater complexity.
Market research example
An example of market research might be when a company wants to launch a new product, specifically a new flavor soda.
First, the company must pose the problem that would be to estimate the market response to the new soft drink. As it is a novel product, there are no previous studies in this regard. So, a hypothesis is formulated, for example, that the new drink will have a good reception, particularly in the young Mexican public, due to its taste and good price.
To demonstrate the hypothesis, focus groups are conducted and other research instruments are used to collect data. Then, the results will be analyzed to know if the hypothesis is correct and if the product could be successful in the Mexican market.
To conclude, we can say that market research is very important for any company, since as long as it gets to know its consumers and market better, it will be able to develop products that better satisfy the needs of its consumers.