This article describes market research, its goals and objectives, the kind of data gathered and how those data are analyzed. An example is provided.
As my students in research come from various disciplines, I need to strike a balance on the topics and generalize as much as possible on the principles of research. I take effort, however, to have specific examples relevant to my student’s background, so that they will appreciate better the role of research in their respective fields.
Some of my students are business graduates and many of them cannot imagine how research works in their field. The truth is, research is very much relevant in the field of business, particularly the marketing aspects that this article focuses on.
I see it necessary, therefore to define market research, what are is its goals and objectives, what kind of data is gathered and how those data are analyzed.
Definition of Market Research
After reading through the many definitions of market research, I came up with the following definition relevant to this discussion. Market research is simply the process of using research in view of increasing sales or income within the shortest time possible to gain the greatest profit.
Goal and Objectives of Marketing Research
The main goal of any business is to achieve greater or more sales, greater productivity, greater or faster return on investment (ROI). Marketing research could provide the information required to realize this goal.
The objectives of marketing research most commonly revolve around the following interests:
- find out which products are preferred by consumers
- determine which group of people buy which type of product
- where the buying customers live
- what age group search for and buy which product
- how long people stick with the product they buy
- at what time or periods do people buy which product
- what do people like and dislike
- how much are people willing to pay for a good or service
- a lot more…
To simplify matters, marketing research, essentially just want to find out the characteristics of consumers and see how they should design products, improve services, develop strategies or techniques to capture these customers. A business thrives if it is able to answer the needs and wants of its customers. This makes it competitive.
If a company does not understand its customers, then most likely it will suffer a great loss in sales or reduce their income, spend more than they earn, and eventually get bankrupt. They may be promoting services or selling and producing products which are not relevant to customers’ needs and wants. Why produce a product that does not sell anyway? Why offer a service that is not in demand? And why keep on operating if the business is losing?
How the Results of Marketing Research are Analyzed
The data gathered about customers is useless unless analyzed using advanced statistical applications. Various approaches are applied in analyzing data obtained from market research but the common approaches employ multivariate statistics such as multiple regression, factor analysis, canonical correlation, multiple discriminant analysis, among others.
What is multivariate statistics and why multivariate? Multivariate statistics simply refers to analysis using not just a few variables; not two, or three but several or many variables at the same time. Aside from saving time, the results of such analysis can pinpoint which customer characteristics really matter when it comes to product purchase or sales.
To further clarify this idea, a market researcher might ask: “Which of the following customer characteristics: age, gender, occupation, income, residence, or nationality click more often the ads on an electronic product?” This information may be sourced from data gathered when someone signs up for a service such as an email or a social networking site. When you sign up in whatever services that are given free in the internet, bear this in mind. There is no such thing as free lunch.
Those who click on the ads on electronics are potential customers and knowing their characteristics will help sellers focus their marketing strategies. A multiple regression analysis will show this information. But of course, marketing researchers would have to find out if indeed there is a correlation between clicks and sales. A simple correlation analysis will enable them to answer this question.
If the data analysis reveals that gender has something to do with interest on an electronic product, then the product sellers should design marketing strategies that consider the role that gender plays on product selection. What products do men and women want? On the other hand, age may also be a factor, so this must also be considered. A model can then be constructed to estimate demand for the product using a combination of factors that predict its sales.
Conclusion
Well, this is just an introduction to market research with a simplified example. The point is that market research is a crucial component of business strategy especially among large businesses. A little change in the practices of a large company or even a small business can mean a lot in sales. The information provided by market research is an important part of business decision making.
© 2013 August 7 P. A. Regoniel