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Market Research - The Basics


What is market research?

Market research can be described as information gathered in order to better understand an industry, product, or potential clientele. There are two basic types of market research consisting of primary and secondary. Primary market research consists of specific information collected to answer specific questions. A few examples include user surveys, focus groups, phone interviews, and customer questionnaires. Many times specific studies are commissioned by private or public entities and are conducted for a fee by market research firms that specialize in various methods of data collection. Results are then published and may or may not be considered proprietary and thus may or may not be made publicly available. Secondary market research is information that has been gathered and repackaged from already existing sources. Most marketing research has been, at one time or another in its lifecycle, considered primary research; someone somewhere identified the information to be gathered and contracted some entity to collect, repackage, and perhaps distribute or publish the data. Most of the information sources familiar to librarians and their patrons are considered secondary sources of market research. Sources such as government agencies, their statistics and publications, books, journals, and newspapers as well as trade association information are all considered secondary market research.

Why is market research needed?

Market research plays an integral role in any successful business endeavor by assisting the entrepreneur as well as potential investors in identifying key pieces of information for the business and marketing plans. Understanding the industry, future trends and outlooks, potential competitors and their product/service offerings, distribution channels, price points, identifying possible market niches, customer demographics, etc. are all possible with the aid of market research.

How is market research accessed? Where is it available?

Primary market research may be accessed directly from the vendor who conducted the research or via various services that collect several providers' reports, called aggregators. Many market research vendors, as well as aggregators, make reports and tables of contents accessible via the Internet as well as through database services such as Dialog or Profound. Entire reports can range in price from a few hundred dollars to several thousand. Many times vendors will sell sections of various primary market research reports for much less than the entire report would cost. This is referred to as "cherry picking" and can be a cost-effective alternative to purchasing the entire report. Another cost-effective strategy can be to access the vendor's white papers, generally available for free at their Internet site. These are summary papers that are published when a new study is released and many times contain valuable bits and bytes of information. A few of the many potential sources of primary market research are:

Secondary market research is by far the most cost effective information solution and generally the best place to start the information gathering process. This information is extracted from industry studies, books, journals and other published resources and are readily available at most public libraries and many times accessible for free via the Internet as well. You should look to both sources for a complete picture.

What to look for:

  • Basic demographic information. The age, sex, geographical region, marital status and so on of your existing and potential customers and clients. More in-depth demographic information provides details on their personal preferences and buying habits.
  • Customer ideas and opinions. Information such as product quality preferences, motivators of buying decisions, color preferences, and so on.
  • Buying cycles or patterns. Do they buy weekly, monthly, yearly? Are the purchases spontaneous or planned? Is it a purchase for self or a gift for others?
  • Trends for new or improved products and services. What needs do they want to have filled? What's missing in the marketplace?
  • Strategic alliance opportunities. Who else is doing what you do? What companies could complement your product or service offerings if you worked together?
  • Opportunities for beating your competition. What's important to your customers - Price? Quality? Features? Prestige?

    Source: http://edge.lowe.org


Pitfalls to Avoid

  • Using a sample that does not represent the total market.
  • Asking the wrong questions.
  • Not listening to the responses.
  • Building in biases or predispositions that distort the reliability of information.
  • Letting arrogance or hostility cut off communication at some point in the marketing process.

Source: Managing a Small Business

 

 
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