What is Market Research?
- I. The Importance of Market Research
- II. Global vs. Domestic
- III. Business-to-Business
- IV. Consumers
- V. Potential benefits
- VI. Buyers
- VII. Various Research Methodologies
- VIII. Sample research studies
- IX. Choosing the right firm
- X. Competitive Intelligence
- XI. Market Research Ethics
- XII Market Research & Competitive Intelligence Resources
I. The Importance of Market Research
Companies are impacted by foreign competition through the price of their resources and the demand for their products. Market research provides the insight to improve daily operations and save costs.
New Product Development:
Nine out of ten products fail. One major reason for such a high rate of failure is the lack of information from consumers or lack of knowledge. Though an innovation may offer consumers more benefits, it may not appeal to consumers in the context of existing products. Market Research helps to minimize risks in business decisions.
Market Research and Competitive Intelligence (CI) allow managers to track competitive developments and to develop strategies accordingly.
Capturing market opportunities is essential for managers. In planning for a company’s development, executives use Market Research to add credibility to organizational plans.
II. Global Market Research vs. Domestic Market Research
Domestic Market Research observes opinions in a particular area. As such, the discipline pays close attention to local and national markets and analyzes such information in the context of geographic, income, and ethnic considerations for the region of study.
Global Market Research consists of conducting studies in another country or conducting multi-country studies. It analyzes cultural differences and economic factors that influence purchasing decisions and opinions. Indeed, the global markets are a tempestuous sea of risks and opportunities for many companies. Choosing to take a company global is often a necessity, but if projections of demand are inaccurate or if there is inadequate information on a Market, companies may suffer.
Emerging markets composed of over 4 billion total consumers currently represent a market value of over $32 trillion. From the most considered BRIC countries to peripheral markets like Thailand, Turkey, and Malaysia, companies not only need market data on their competitors but insight into the DNA of their competitors. They need to know recent competitive actions and need to possess the ability to gauge a competitor’s possible future actions. They certainly need to know their vulnerabilities and know potently their strengths. Companies need this insight to carefully capture opportunities and maneuver through the rapid transformations in the global economy.
Market research studies the interactions among organizations, how they interact, and their purchasing patterns.
In B2B research, reaching respondents can be challenging in encouraging managers and executives to respond to surveys and interviews. Methodologies often include face-to-face in-depth interviews, focus groups, telephone interviews and online panel surveys.
Companies need to know what consumers are thinking in order to properly position themselves and strategically function in the marketplace.
It seeks to gauge the opinion of customers and employees to gain the insights to be able to act. Like Business-to-Business research, Consumer market research can be both qualitative or quantitative. Global consumer market research poses many challenges to researchers with changes in cultures, different macroeconomic forces impacting behavior and varying attitudes and perspectives.
V. Potential benefits of Market Research
- Gain a competitive advantage through penetration of untapped markets
- Identify new and competing technologies
- Segment current and potential new markets
- Reposition your business vis-a-vis your competitors
The typical profile of a buyer is a manager of Marketing, Business Development, Strategic Planning, or a management executive who recognizes an opportunity or challenge or need for more information and embarks on a process to locate such information.
Other buyers include market research agencies, advertising agencies, management consultancies, university professionals and governmental organizations, among others.
VII. Various Research Methodologies
A distinction exists between primary and secondary research. Primary research is the situation in which a researcher goes to the source indirectly contacting people directly involved or accessing the most relevant information on a topic. On the other hand, secondary research involves analyzing materials present in the market at the time of research (e.g. newspapers and databases) and analyzing that information in the context of market and economic conditions.
Various methodologies exist to provide the most effective means to discover information. These methodologies are chosen based on the type of respondent and the project’s objectives.
- Focus groups
- Telephone Surveys
- In-depth Interviews
- Online Surveys
- Mail Surveys
- Executive interviews
- Customer Ethnography
- Sensory methods
- On-site interviews
- Secondary research
- Brand switching
- Brand / perceptual mapping
Indeed online research methodologies are being used more and more often because of their attractive cost and the convenience in conduct online surveys. However, face-to-face and telephone methodologies still remain popular in monitoring the quality of research surveys.
VIII. Example studies
The following are several common studies conducted by research firms.
- Market Entry/Market Feasibility: Analyze a company’s entry into foreign markets
- Market Sizing: Gauging Market demand
- Customer / Employee Satisfaction Studies:
- Business-to-business research: Researching business that only does businesses with other businesses (e.g. surveying distributors)
- Business Intelligence: Analyzing market opportunities
- Competitive Intelligence: Analyzing and tracking competitive movements
- Attitude and Usage Studies
- Market Segmentation Studies
- Distribution Channel Studies
- Purchasing Trends / Patterns
- Advertising Research & tracking
- Brand equity studies
- Marketing effectiveness
- Concept testing
- Customer or Employee Satisfaction research
- Customer Satisfaction Surveys
- CVA (Customer Value Analysis)
- Gap Analysis
- Strategic Partnership / Alliance Studies
IX. Choosing the right firm
Step 1: Search for firms that specialize in your needs
Step 2: Provide a Request for Quotation (RFQ), Request for Information (RFI), or Request for Proposal (RFP) based on your research needs
Step 3: Evaluate proposals / prices in terms of the organization’s budget and needs. Ask questions about the final deliverables. Research firms have various specialties and one proposal will likely better accommodate research objectives.
X. Competitive Intelligence
Competitive Intelligence (CI) is the collection and analysis of data about another entity or enterprise.
The discipline adheres to the strict ethics of the Society of Competitive Intelligence (SCIP). According to SCIP, the discipline must:
- To continually strive to increase the recognition and respect of the profession.
- To comply with all applicable laws, domestic and international.
- To accurately disclose all relevant information, including one’s identity and organization, prior to all interviews.
- To avoid conflicts of interest in fulfilling one’s duties.
- To provide honest and realistic recommendations and conclusions in the execution of one’s duties.
- To promote this code of ethics within one’s company, with third-party contractors, and within the entire profession.
- To faithfully adhere to and abide by one’s company policies, objectives, and guidelines.
- Competitive Intelligence strives to make companies more competitive through ethical means.
To find relevant information, most firms adhere to strict ethics through trade associations like ESOMAR and the Insights Association (Formerly known as the MRA and CASRO).
Some ethical considerations:
- Clients’ privacy
- Respondents’ privacy
- Quality considerations
- Fieldwork quality
In choosing a vendor, it is important to know whether your vendors (1) belong to these organizations and (2) show a commitment to honor such ethics.
Market Research & Competitive Intelligence Resources:
- American Marketing Association (AMA)
- Advertising Research Foundation
- European Society for Opinion and Market Research (ESOMAR)
- Focus Vision: Focus Group Facility Network
- HSMAI Hospitality Market Research Firms
- ICG – Independent Research Consultants Network
- Insights Association (Formerly MRA and CASRO)
- Market Research Society (MRS)
- Printemps des Etudes (France)
- Qualitative Research Consultants Association (QRCA)
- Research and Results Conference (Germany)
- Strategy and Competitive Intelligence Professionals (SCIP)
- User Experience Professionals Association (UXPA)