Market Research - Definition, Importance & Types
What is Market Research?
Market research is a study conducted by firms to understand & evaluate market needs when planning to produce & sell new goods. Market research involves looking at target consumers, competitor benchmarking, existing prices & compiling data for calculated decision making. This knowledge empowers the company to understand the market opportunity as well as the industry.
Importance of Market Research
Whenever a company wants a launch a new product or service, it is utmost important they understand the industry, existing competitors, price trends, target customers and the overall business opportunity. This requires a thorough study via surveys, polls, research papers, interviews etc. This process of collecting, evaluating & analyzing data is known as market research.
Types of Market Research
The different types of market research are explained as:
1. Exploratory Research - This type of study is used to explore the basics needed to start any activity. It is a basic non-conclusive research, and after this more research study is needed. Exploratory study involves secondary research, pilot study, experiential research, case studies etc.
2. Descriptive Research - This study defines & describes the problem or opportunity that a company is seeking. This describes the population, demographics, household income, personas and the market.
3. Causal Research - This type of market research evaluates the cause-and-effect nature of consumers. This is more of a qualitative research which is used to identify the behavior of consumers.
Market Research Methods
There are several methods to collect data & conduct a study. Some key methods are:
1. Survey
2. Polls
3. Interviews
4. Secondary data or historical trends
5. Experiments
6. Observation
Advantages & Disadvantages of Market Research
Some benefits of such a study are:
1. Helps companies to improve performance.
2. Helps in understanding of the market better.
3. Marketing research can be useful increasing new products as per the needs.
4. Exploration of new markets for its products.
5. Better understanding of competitors, and customer perception.
Some disadvantages of marketing research are:
1. Forecasting can never be exact.
2. Errors in findings can affect overall understanding.
3. High cost and time consuming.
Hence, this concludes the definition of Market Research along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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