Marketing research is, generally speaking, any type of objective evidence that can be used to help predict commercial success with a particular product. It can come in many forms. Without at least some marketing research to support a prediction of commercial success for a product, then any such prediction is simply speculation. On the other hand, no matter how much marketing research is done you will never have a guarantee of success – there will always be some uncertainty – some risk.
So the goal of proper marketing research is to collect, at a reasonable price under the circumstances, sufficient information and evidence to be able to make an objectively rational prediction of commercial success (while being aware of and acknowledging the element of risk, which is often substantial).
There are two main categories of data in market research, primary and secondary. Both primary and secondary research can be important in evaluating the potential commercial success of a product.
- Primary Market Research Data
Primary research is conducted from scratch, and is customized to answer a specific question for a particular person or business. An example of primary research data would be the results of a survey prepared for a particular business that contained specific questions regarding the product of that business.
- Secondary Market Research Data
Secondary research is data that already exists, and has been collected for some other purpose, usually by or for someone else. An example of secondary research would be U.S. Census demographic data for a particular region, or a published study on the trends in a particular industry. Secondary research is often much less expensive (and valuable) than primary research. Secondary research often cannot be used alone to provide accurate and reliable support for answers to specific questions about the prospects of success for a particular product.
There are also two broad categories of marketing research methodologies:
- Question Based Marketing Methodology
Research based on questioning would be, for example, research that is based upon prospective customers answering questions in a survey.
- Observation Based Marketing Methodology
Research based on observation would be, for example, research based on observing behaviour (such as how many people ordered a particular item from a menu on a given day of the week).
Within the two broad categories of marketing research methodologies there are qualitative and quantitave approaches to collecting the market research data.
Qualitative research is generally used for exploratory purposes. It typically involves only a small number of respondents – not a statistically significant number, so the results of the research are not generalizable to a whole population. The value of such research is to stimulate ideas, and possibly identify issues or problems at an early stage when corrective action may be taken without to much expense. Examples of qualitative question based research would include in depth interviews and focus groups.
Qualitative observational market research is referred to as "ethnographic". The researcher observes social phenomena in its natural setting. Observations made at one time, or over several time periods. An example would be observations of customers using a product.
Quantitative research is generally used to support specific conclusions, and relies upon the application of scientifically established statistical techniques. A statistically significant random sample (usually a large number of people) from a certain population (such as the target market) is tested to collect data that can be used to reliably infer results for the entire population. An example of quantitative question based research would be market research using surveys to investigate the pricing of a new product using techniques such as Gabor-Granger technique, van Westendorp, or Conjoint Analysis. Quantitative research can be very valuable, but should be done by qualified professionals, and accordingly is often very expensive.
Quantitative observational market research involves the researcher creating a controlled environment where he can control certain factors to quantify the effect on observed behaviour. An example of this would be a purchase laboratory, where a researcher creates a simulated "store". Participants are given money or credit to use in the simulated store. The researcher can then manipulate variables like product packaging, price, shelf location, etc. . . and observe and quantify the results.
Professional market researchers will often use more than one research technique to help a client get answers to specific questions. Research may start with secondary research to get background information on the market. Then a focus group (qualitative research) may be conducted to explore issues. Finally a larger question (mail or telephone) survey (quantitative research) may be done.
Depending upon your qualifications and resources, you may be able to do a reasonable amount of secondary market research on your own, as well as possibly some qualitative research. However, significant quantitative research is often best left to professional market researchers who have the necessary training and experience to properly design, execute, collect, and interpret results. If you are considering investing in professional market research consider consulting these resources:
Different business ventures will require different approaches to market research. Generally speaking the greater the investment that will be required in developing and bring a product to market, the greater the need for an initial investment in quality professional market research. Some market research should always be done so that you are not proceeding on pure speculation. The market research that is done should ideally provide answers to the specific important questions that need to be addressed concerning your business venture. Some of the most common and important of those questions are covered in the next parts of this guide.