Market research is the method of gathering and analyzing information about customers, competitors and the market. Market research is used when companies want to focus on things like market trends, customer habits and lifestyle, what price customers will pay for a product and what competition exists. This type of research assists companies build an idea on how competitive the market is also business owners can price their products efficiently with the understanding of the current market research. Market research can provide companies with vital information which allows them to make choices based on what the customer wants. It can allow businesses to predict what might happen in the future of a market and how to plan for such events. Types of data
There are two types of data which market research can collect: Qualitative and Quantitative Qualitative data Qualitative data is data which describes and explains something is – such as why customers act in the way they do or why a market is shrinking in size. It is generally any type of non-numeric data. Such data is usually highly biased and may not be representative of the whole population. Data is essentially hard to analyse and quantify providing less scientific results. Qualitative data does however give a more in-depth and rich description. Qualitative data could be a body of text or narrative, non-numerical, information. A company can examine qualitative data to identify connections between categories of information. It can also be used to uncover trends based on variations in consumer behavior, such as spending patterns. Data interpretation shapes business goals and objectives, and serves as a key resource for directing marketing efforts.
Quantitative data is usually far more scientific and numerical; it can include percentages and frequencies. As quantitative data is usually available in a greater quantity it is usually more representative. Quantitative data can help describe a market such as its size and growth but it can’t explain why.
Businesses use various quantitative data gathering methods to track productivity. The data can be used to classify employees and work units, and to award raises or promotions. Additionally, you can also use such data to justify the termination or discipline of poorly performing workers. If you operate a manufacturing company, for example, you may track quantitative data that details the number of units that each worker produces over a particular period of time. Service companies often track the number of worker-client interactions on a daily basis. You can gather data over long periods of time such as a month, quarter or year. Some businesses, however, prefer to review production data on a daily basis to ensure that workers are being productive at all times.
Primary research is research which is conducted first hand it can include collecting information from interviews, surveys and observations. Interviews
Interviews provide a way for businesses to collect detailed qualitative information from a small selection of people by face to face discussions Advantages
Interviews can provide much more information and detail as the interviewer can spend far longer with the person and ask them questions based on their responses. Unlike surveys the respondent is not limited to a list of set answers which enables more in-depth responses. Disadvantages
* With a small sample the results may not be representative of the whole population. * As interviews are more personal than surveys interviewees may hold back on certain topics. * Interviews usually cost more to carry out and take longer to collect and analyse responses than surveys or observations Surveys
Surveys or questionnaires allow businesses to collect a large number of responses to a number of set questions. Advantages
* Surveys are typically cheaper to create and collect responses. As respondents usually select an answer from a list of selections analyzing data is far easier * Results can be made to be critical of a population by targeting a select group of people Disadvantages
A survey takes time to create, questionnaires must be well thought out and this can be expensive. Things which need to be considered when creating a questionnaire include:
* What is the goal of the questionnaire?
* Are the questions clear-cut?
* How many people to question?
* Who to question?
Observations involve watching customer’s behaviour. This can include observing how a customer responds to packaging, how long they take to make a decision or even how they navigate a shop. Advantages
* Observations are cheap to conduct and setup
* The information collected can be used to make a product more attractive to consumers by simply altering the packaging and placement in a store. Disadvantages
Whilst observations can inform a business of what a customer does it cannot explain why? Secondary research
Secondary research is research which involves collecting information from already published and gathered data. This data is called secondary data Secondary data can come from either outside or inside the business. Secondary data sources should always be considered by any firm conducting research. No business can afford to waste time and money conducting expensive surveys to gather data that already exists! However, secondary data may have been collected some time ago and, therefore, be out-of-date because it has been collected for another purpose, it may be in the wrong format or incomplete.
The advantages and disadvantages of using secondary data will vary from source to source. Government data, for example, is usually cheap or even free to access. It is likely to be accurate and updated regularly. However, it may be too general and, because it is available to everyone, it is unlikely to give an organization any competitive edge. Some information on competitors may be easily available via company reports or websites, but these are unlikely to contain sensitive information or data that gives the firm a negative image.