What is Market Study? Definition of Market Study, Market Study Meaning and Concept
A market study is an initiative developed within the marketing strategies that companies carry out when they intend to study and learn about a specific economic activity.
The definition of market study is the action that analyzes and observes a specific sector in which the company wants to enter through the production of a good or the provision of a service.
To do this, you need precise conclusions about the environment in which you want to develop and the result that an entry into it would have, given the characteristics of the good or service in which you have worked. All the information obtained will represent a forecast of the company, useful when planning an investment or entering a market.
By observing it, the possibilities of success that it would have to operate with a particular good or service offered are raised.
Objectives of the market study
The main premise behind conducting market studies is to obtain a clear answer regarding the number of consumers who would like to buy the product, in which space the business would be developed, for how long and what price would be paid to get it..
That is to say, it is a study job to find out what is being offered, to whom it is being offered and who else is offering something the same or similar in that market (market research and competition).
Types of market research
We can find four main types of market research:
- Qualitative: It consists of analyzing and studying the market through variables that cannot be measured. In this sense, aspects such as the feelings of a customer when buying a certain product are taken into account. Along with this, tastes also play an important role in this type of study.
- Quantitative: In this case, data extracted from a population sample are used to draw conclusions. For example, the total number of consumers of a certain product or the maximum price that a customer is willing to pay for the purchase of a good or service.
- Primary: This type of study refers to the way to obtain the data. In the case of the primary market study type, the information is extracted as a result of a field study. For example, through surveys.
- Secondary: Compared to the previous type, it is a much cheaper market study to conduct. The information is obtained through reports, books or articles, among many others.
How to do a market study
In this sense, it is important to carry out a thorough analysis and overcome the following stages to carry out a good market study:
- Where are the potential consumers of my product geographically.
- What are the characteristics that define these people (technically, our target). For this, we will need to know your economic capacity, your tastes or substitute products that you can consume, among others.
- How the sector in which we want to enter has behaved and what we think will happen in the future. Knowing the historical prices or production costs of competitors can be very useful information.
- The role that what the company offers would play in this sector; that is, if it is going to be something revolutionary or just another competitor.
Another important detail to take into account when conducting a market study is the study of the distribution channels that normally operate in the sector you want to enter, as well as how they work.
All this information will serve to give the company an idea of the size of the investment that it will need to place its product on the market, as well as knowing where and when to do it. Last but not least, you will get to know your potential customers, those people who would initially like your product.
Market study example
Suppose we want to open a greengrocer in our neighborhood. In order to develop the project successfully, we decided to carry out a market study and see what the situation is.
We start by asking our neighbors in the building what they think of the service and price offered by the other greengrocers in the neighborhood. Later, we read different articles that talk about the rise of greengrocers because an increasing percentage of the population is vegan or vegetarian.
Subsequently, we decided to count the number of clients our future competition has throughout the day. We also collect information about your hours, opening days and closing periods.
After extracting all this information, we will decide if it seems interesting to us to create a new greengrocer for the residents of our neighborhood.