Market Research

What Is Market Research?

Market research is the process of determining the viability of a new service or product through research conducted directly with potential customers. Market research allows a company to discover the target market and get opinions and other feedback from consumers about their interest in the product or service.

This type of research can be conducted in-house, by the company itself, or by a third-party company that specializes in market research. It can be done through surveys, product testing, and focus groups. Test subjects are usually compensated with product samples and/or paid a small stipend for their time. Market research is a critical component in the research and development (R&D) of a new product or service.

Understanding Market Research

The purpose of market research is to look at the market associated with a particular good or service to ascertain how the audience will receive it. This can include information gathering for the purpose of market segmentation and product differentiation, which can be used to tailor advertising efforts or determine which features are seen as a priority to the consumer

A business must engage in a variety of tasks to complete the market research process. It needs to gather information based on the market sector being examined. The business needs to analyze and interpret the resulting data to determine the presence of any patterns or relevant data points that it can use in the decision-making process.

How Market Research Gathers Information

Market research consists of a combination of primary information, or what has been gathered by the company or by a person hired by the company, and secondary information, or what has been gathered by an outside source.

Primary Information

Primary information is the data that the company has collected directly or that has been collected by a person or business hired to conduct the research. This type of information generally falls into two categories: exploratory and specific research.

Exploratory research is a less structured option and functions via more open-ended questions, and it results in questions or issues being presented that the company may need to address. Specific research finds answers to previously identified issues that are often brought to attention through exploratory research.

Secondary Information

Secondary information is data that an outside entity has already gathered. This can include population information from government census data, trade association research reports, or presented research from another business operating within the same market sector.