Market Research: Definition, Analysis & Methodology

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  • 0:03 Definition of Market Research
  • 0:26 Six Steps of Market Research
  • 4:15 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Conducting a successful business is too complicated and costly to just wing it. In this lesson, you'll learn about market research and the six steps that are involved in it.

Definition of Market Research

According to the Market Research Association, 'marketing research is a process used by businesses to collect, analyze and interpret information used to make sound business decisions and successfully manage the business.' Information collected through marketing research helps to identify opportunities and problems. It's used to design marketing activities, to refine the marketing activities, and to evaluate them.

Six Steps of Market Research

Marketing research is a process that can be broken down into six steps. Let's take a look at each of these steps:

1. Problem Definition

You can't solve a problem if you don't understand it. For example, your business had a significant loss in revenue from the last quarter. The more precisely you can define the problem, the more focused the research will be in finding the correct solution. For example, upon further review of sales data, you note that the loss of sales was due in large part to a particular product group. So the problem definition may be: why was there a decline in sales for this product group?

2. Research Objectives

Once you have figured out the problem, it's time to set the objectives for the research, which is usually of three types. The research objective may be exploratory to obtain preliminary information that may help better define the problem and develop a hypothesis.

Another type of objective is descriptive. Here, you are engaging in research to describe something important for your company, such as the market potential for a proposed new product or demographic research to determine the company's target market for a product.

Finally, the objective may be to determine whether there is a cause-and-effect relationship, meaning one variable directly affecting another variable. For example, you may research whether the reason for a decline in sales is the entrance of a new competing product in the market.

3. Research Design and Data Sources

After you have determined your research objectives, you need to design the project and determine appropriate sources of data for the project. Researchers can use primary data, secondary data, or both.

Primary data is information collected by you for the specific research project. Primary data can be collected through surveys, focus groups, interviews, and observational research.

Secondary data, on the other hand, is data that already exists somewhere else that has been collected for another reason unrelated to your research project. Examples of secondary data may include government statistics, financial records, sales records, books, and journal articles, among others. When using secondary data, you need to ensure that the data is relevant to your research study, accurate, current, and impartial.

4. Sample Design

An important part of the research design is determining the appropriate sample data and size. You want to make sure your data is collected from the correct target population, which is the group of people relevant to answering the research question. If you're trying to figure out why adult males between the ages of 40 and 50 are not purchasing your product, while adult males in all other age groups are purchasing the product, obtaining data from teenage girls won't help you.

Once you have determined your target population, then you must determine the sample size and the method of drawing a sample. Costs may dictate the design of the sample and its size. For example, it's cheaper to survey 700 consumers rather than 7,000 - even if the results may be somewhat more accurate with the larger sample.

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