Shawn has a masters of public administration, JD, and a BA in political science.
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.
5. Data Processing and Analysis
Once the data has been collected, it needs to be organized for analysis. This often involves coding the data, which is establishing categories for responses so that common themes and patterns can be discerned from the data. If the data is subject to statistical analysis, you may run the numbers through a stats program to determine if there are any correlations, which are relationships between two different variables, such as price and sales. For example, there may be a correlation between a recent drop in sales of a product and the recent increase in the product's price.
6. Presentation of Results
Finally, you will present your results and conclusions to management. Results may be communicated in a formal report or verbally, depending upon the sophistication of the research and time constraints.
You should note there's no guarantee that the research will definitively provide a solution to the problem. Moreover, it is often the case that completed research will result in further questions requiring more research!
Market research is a process by which a business collects and analyzes data in order to make appropriate business decisions. Marketing research can help you discover problems, find solutions, and identify threats and opportunities. Many entities engage in market research, including businesses, non-profits, and even government.
Steps involved in market research include the following:
- Problem definition, where you clearly identify the problem
- Research objectives, of which there are three types: exploratory (which is used to obtain preliminary information); descriptive (which involves engaging in research to describe something important for your company); and cause-and-effect (which investigates one variable directly affecting another variable)
- Research design and data sources, which include primary data (information collected by you for the specific research project_ and secondary data (or data that already exists somewhere else that has been collected for another reason unrelated to your research project)
- Sample design, which involves finding the correct target population (or the group of people relevant to answering the research question)
- Data processing and analysis, in which you establish correlations (or relationships between two different variables)
- Presentation of results, where you deliver your results and address possible future research
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