Value of market research
The global competition has reached its peak where a startup software business uses lean methodology to minimize the setup cost. Even in such a scenario, market research holds its importance. Majority of the companies still have traditional setup with a need to understand the value of their product and services in the market. This is where the market research comes into picture. It can be added that, market research is not only used to start a new business but also, extensively benefits an existing business by improving an existing product and service or locating new customer base. Companies often conduct market research on existing products as well to analyze demand graph in respect to growing competitions especially during strategic planning. Market research is used to take decision by using SWOT or PEST analysis.
Pioneer to Marketing
Market research is essential to begin the process of marketing where information is obtained on competitors, market value for a product, existing customers and their buying habit and capacity. Type of market research indicate the methodology and procedure to analyze the collected data. Choosing an appropriate market research depends on the business issue and requirement like awareness, revenue target, acquisition and retention.
Primary and secondary market research
There are two basic types of market research primary and secondary. Primary market research involves gathering of exclusive market insights through observing people’s behavior and conducting surveys (face to face interviews, questionnaire pattern etc). Organizations opt for primary market research when complete data cannot be obtained from secondary research. Primary market research offers unique insights and potential actions to improve business.
Secondary market research is usage of existing data points like government and industry published report. Before conducting a primary market research, it is advisable that a company first conducts a secondary research which will be cost effective and the company will also be able to reach a faster research objective.
Quantitative market research
A primary research that involves collection of large volumes of data is known as quantitative market research. Quantitative research is conducted on bulk and is based on multiple choice questions that increases the chance of getting more response. There are three types of quantitative market research. They are as follows:
- Survey – Nothing works better than a survey, especially through available platforms where questions with multiple choice answers can be posted. Also, surveys based on social media and web visitor insights help in this regard. In this respect Net Promoter Score (NPS) can also be utilized to gauge the performance of customer service department. Also, SWOT analysis helps in strategic planning and documentation. The success of survey market research depends on the sample size collected.
- Observation –It involves in observing the behavior of the target audience while they are purchasing a product to analyze the influences that decide purchase of a particular product or service.
- Interviews – Face to face interview with customer add a lot of value to market research. However, if face to face interview is not feasible, VoIP calling services can be engaged to fulfill the task. Companies often conduct focus group interviews as well, demarketing their customer base into three broad segments like: potential customers, existing customers and lost customers. Phone survey interviews are very effective and involves a bulk of consumers and their view on a product or service.
Qualitative market research
This type of market research is associated with branding and positioning where a company seeks feedback from its existing customers to improve quality of its product and service. Qualitative research is conducted on low data volume where people are interviewed and asked open ended questions about their opinion.
Following a qualitative approach, this type of market research is rarely conducted on a small niche group to evaluate the comfort zone of a group that will lead the cluster to buy more of the products the company has to offer.
Market research can also be based on functional objective. There are four such types of market research.
1. Exploratory research – This is often conducted when an organization lacks information and understanding about a research problem. This kind of research aids to gain insight, formulate problems, check practicality and relevance of research design. It helps to create a base for a full-fledged market research. It uses unstructured format, qualitative technique and secondary market research.
2. Causal research – It is a unique method of market research where cause and effect relationship of a product is observed. It studies the impact of price drop of a product in the consumer market and price rise of the product in the market making it premium. This kind of market research is conducted for the launch of new product.
3. Descriptive market research – It involves a series of open-ended questions to test a hypothesis and find out the accurate solution. The objective is to measure the frequency and variable in a market scenario.
4. Predictive Market Research – It is used to predict market variables for which the research is designed. It predicts future sales, market growth etc.
Other types of market research in use
It is a tool used for market research to observe another website’s traffic. This kind of data helps to gauge web traffic volume and bounce rate along with the sources and domains.
This tool helps in the form of market research where organizations create perception about potential customers and their search criteria and the possible competition that the company will encounter due to the existing competitors in the market. A market study based on search result can aid to comprehend the market trend through observing people’s behavior and search patterns.
Product testing and brand awareness survey
It is a type of market research where a research is conducted to understand the importance of the feature of a product to the target market along with detailed insight on the competitors. Also, it is assessed whether advertisement or campaigns impact the revenue generation from the product. A brand awareness survey helps in brand recognition, identity, loyalty etc.
This tool has all the information publicly available for conducting market research. It helps to identify the psyche of the customers of a competitor in general. It also helps to identify pricing, delivery and service of competitive firms. Blog or new letter posting in social media frequently assist an organization to analyze the need of a product from the readers list which also determine the interest of a customer in a product or service.
It is essential to understand a competitor’s financials be it revenue flow or financial background in reality. A substantial amount of research is also conducted on the senior management and their focus on revenue generation.
They form a great source of market research. This helps a company analyze the growing problem and the possible solution discussed.
Hosting an event also determines the interest of people in a particular product that a company has to offer. Similarly, field trials offer both qualitative and quantitative feedback that shapes the business decision.
Market research is useful for all business types however, its usage is based on the research objective of an organization. Also based on such objective, a company decides whether to use quantitative or qualitative market research methodology.
– Kathakali Basu