What Is Market Research And How To Do One? (with Examples)

Market research consists of the collection and analysis of certain information from the market that is carried out to make decisions or formulate strategies.

Conducting market research allows a company, among other things, to identify a business opportunity, know the feasibility of launching a new product, and find the cause and solution to a problem.

In this article, we tell you what market research is, what types exist, and how to do one step by step with the help of examples.

Market research allows companies to make better decisions and formulate more effective marketing strategies.

What is market research?

Market research is the process through which certain information from the market is collected, said information is analyzed, and, based on said analysis, decisions are made or strategies formulated.

The reasons for carrying out market research can be diverse, ranging from an investigation that allows us to know the feasibility of starting a business or introducing a new product to the market, to an investigation that allows us to find the cause and solution of a problem, or test a market hypothesis.

Likewise, the depth of market research can also be varied, ranging from a somewhat informal investigation that allows us to better understand customers through small informal surveys, to a formal, expensive investigation lasting several months that involves performing different market tests.

Types of market research

Depending on its reasons for doing it and its depth, market research can be classified as exploratory, descriptive, and causal:

Exploratory investigation

Exploratory research is somewhat informal research that allows for a general understanding of an opportunity or problem, or quick conclusions. This research is usually carried out as a preview of a more complete investigation.

An example of exploratory research allows us to know the tastes and preferences of consumers through small informal surveys.

Descriptive research

Descriptive research is more formal research than exploratory research, which is usually carried out to analyze an opportunity or solve a problem.

An example of descriptive research allows us to know the acceptance or demand that a new product would have through a market test.

Causal investigation

Causal research is formal research that seeks to test a market hypothesis; that is, establishing a cause-and-effect relationship between two variables (for example, determining the factors that influence consumer behavior).

An example of a causal investigation allows us to determine whether a 10% reduction in the price of a product would produce enough sales to compensate for said reduction.

The usual thing is to first carry out exploratory research and then, based on the results of this, carry out descriptive or causal research.

How to do market research?

It is often thought that doing market research is a complex task and that therefore we should hire the services of a specialized company to carry it out for us (which usually charges hundreds and even thousands of dollars); However, the truth is that market research is something that any of us can do if we have the will and know the necessary steps.

Let’s see below the steps necessary to do market research, along with an example that will help us gain a better understanding of them.

1. Determine the need for research

The first step is to determine the need for market research; that is, the reason why it is necessary to do it.

The reasons for carrying out market research are diverse and arise whenever it is necessary to collect certain information from the market to be analyzed and, based on said analysis, be able to make decisions or formulate strategies.

Some of the main reasons to do market research are:

• find or identify a business idea or opportunity.
• Know the feasibility of starting a business or introducing a new product to the market.
• measure the effectiveness of an advertising campaign.
• measure customer satisfaction.
• find the cause and solution of a problem.
• test a market hypothesis.

Typically, the need to conduct market research arises as a result of an opportunity or problem that has arisen.

If an opportunity arises, there may be a need to conduct research to determine whether it is truly an opportunity, and how to make the most of it; For example, if the opportunity to introduce a new product to the market has been identified, the need may arise to research to determine the viability of the product.

If a problem arises, there may be a need to investigate to find the reason and solution; For example, if there has been a decrease in sales, the need may arise to do an investigation to find the cause and solution for the decrease.

Example: we have identified the opportunity to launch a new product on the market, which consists of a new brand of men’s shirts, so the need arises to carry out market research that allows us to know the feasibility of launching said product on the market.

2. Establish the objectives of the research

Once the need to carry out market research has been determined, the next step is to establish its objectives.

The objectives of market research arise as a consequence of the need to carry it out.

If the need arose as a result of an opportunity, the objectives could be related to analyzing the opportunity, and knowing how to make the most of it, and if it arose as a result of a problem, the objectives could be related to finding the cause and the solution. problem solution.

For example, an investigation whose need is to know the feasibility of starting a business could have the objectives of knowing the situation in which the industry or sector to which the business belongs, knowing the acceptance that the product or service to be offered, forecast future demand, and know the main strategies, strengths, and weaknesses of future competition.

Example: once we have determined the need to carry out market research that allows us to know the feasibility of launching a new brand of men’s shirts on the market, we establish the following objectives:

• to know the reaction of the consumer who makes up the target audience to the introduction of a new brand of shirts to the market.
• know the tastes, preferences, customs, and habits of the consumer who makes up the target audience concerning the purchase or use of the shirt item.
• determine the selling price that each of the shirts could have.

3. Identify the information to collect

Once the need and objectives of the research have been determined, the next step is to identify the information that will be needed and, therefore, collect it.

The information to be collected must be that which allows, once analyzed, to meet the needs and objectives of the research.

For example, if the need for research is to find a business idea, the information to be collected could be made up of unsatisfied consumer needs, new tastes and preferences, new fashions, consumer trends, and niches. unserved market, etc.

Or, for example, if one of the objectives of an investigation is to know the feasibility of exporting a product to a foreign country, the information to be collected could be made up of the treaties or trade agreements with said country, its economic situation, the supply and demand of the existing product, etc.

Example: to evaluate the feasibility of launching the new brand of shirts on the market and achieving the proposed objectives, we determine that the information we are going to need and collect will be the following:

• the acceptance of a new brand of shirts by the consumer who makes up the target audience.
• the first thing he looks at when buying a shirt.
• your favorite models and colors.
• the places where he usually buys his shirts.
• the average amount you usually pay for a shirt.

4. Determine sources of information

Once the information to be collected has been identified, the sources from which said information will be obtained are determined.

Sources of information are usually classified as primary and secondary:

• Primary sources: These are sources that provide “first-hand” information for the current research. Examples of primary sources are consumers, competitors, company workers, company records, etc.
• Secondary sources: These are sources that provide information that has already been collected and used for purposes other than the current research. Examples of secondary sources are company databases, government entities, books, newspapers, magazines, etc.

For example, if the information to be collected is that which allows us to know the feasibility of starting a business, the primary sources could be made up of the consumers who make up the target audience (who, for example, would be surveyed). , the competition, and other businessmen. While secondary sources could be made up of publications and statistics about the sector to which the business belongs.

Example: once we have identified the information that we are going to collect to achieve the objectives of our research, we determine that the sources of information that we are going to use will be made up of the consumers who make up our target audience.

5. Select and develop information collection techniques

Once the information to be collected and where it is to be obtained has been determined, the next step is to determine how it will be obtained; that is, selecting and developing the information collection techniques or methods that will be used.

Among the main information collection techniques used in market research are the survey, the observation technique, the market test, and the focus group:

The survey

The survey consists of a verbal or written question that is asked of the people from whom you wish to obtain the information necessary for the investigation.

When designing a survey, questions must be formulated to obtain the information needed for the research; For example, if the information required is that which allows finding an idea or business opportunity, some of the questions that could be asked in the survey are:

• What product or service would you like to exist on the market?
• What businesses do you consider to be the most profitable today?
• What businesses do you think could be successful shortly?
• What business would you start?

Or, for example, if the information required is that which allows us to know the feasibility of introducing a new product to the market, some of the questions that could be asked in the survey are:

• Would you be willing to try this new product?
• What is the first thing you look at when purchasing similar products?
• What are your favorite models or designs?
• What features would you change or add?
• How much would you be willing to pay for this product?

The observation technique

The observation technique consists of observing people, phenomena, facts, actions, behaviors, events, situations, and other observable elements from which it is desired to obtain the information necessary for the investigation.

For example, if the information required is that which allows us to better understand the future competition, the observation technique could be used when visiting their premises to observe the attention they provide to the customer, their processes, and their main products, or when acquiring some of their products to be able to analyze them better.

The market test

The market test or experimentation technique consists of trying to directly know the response of people to a certain product, service, idea, strategy, or other element subject to study, and thus obtain the necessary information for the investigation.

For example, if the information required is that which allows us to know the reception that a new product could have, a market test could be carried out that consists of setting up a small tasting stand where the new product can be tested, and Observing the public’s impression or reaction to it before launching it on the market.

The focus group

The focus group consists of bringing together a small group of people to interview them and generate a discussion around a product, service, idea, strategy, or other topic subject to study, and thus obtain the necessary information for the investigation.

For example, if the information required is that which allows us to know the acceptance that a new product could have, a focus group could be held that consists of calling a group of people to try or examine the new product and provide their feedback. impressions, opinions, and suggestions about it.

Example: to collect the information that we will need, the survey technique will be used, which will be carried out on a representative sample of the target audience. Some of the questions that our survey questionnaire will include are:

• Would you be willing to try a new brand of shirts?
• What is the first thing you look at when deciding to buy a shirt?
• What are your favorite models?
• What are your favorite colors?
• Where do you usually buy your shirts?
• How much do you usually pay for a shirt?

6. Collect information

Once the information to be collected has been determined, the sources from which it will be obtained, and the techniques or methods that will be used to collect it, its collection begins.

Before collecting the information, it may be necessary to name and train those in charge or responsible for it and determine the place or places where it will be carried out, the date on which it will begin, and the time it will last.

For example, if the survey is going to be used as an information collection technique after having designed the questionnaire, obtaining a representative sample of the public to be surveyed, determining where it will be carried out, when it will start, and how long it will last, and appointed and trained the interviewers, we proceed to coordinate and direct it.

Or, for example, if the observation technique is going to be used as an information collection technique, after having determined the information that is going to be collected when visiting the competitors’ premises, we proceed to go to them, if necessary to acquire their products or services, and take note of what was observed.

Example: once we have decided that we are going to use the survey and we have designed our questionnaire, we move on to appoint the personnel in charge of conducting the surveys to the target audience, and making it effective.

7. Analyze the information

Once the required information has been collected, it is counted (data counting), processed (data classified, tabulated, and coded), interpreted, analyzed, and conclusions drawn.

For example, after having used the survey to collect information necessary to know the acceptance that a new product could have, and after having counted, tabulated, and analyzed the data, the conclusion is reached that the product would have good acceptance. since consumers would be willing to purchase it, although as long as it is of very good quality and is accompanied by good customer service.

Or, for example, after having used the observation technique to collect the information necessary to know the possible cause and solution of a decrease in sales, the conclusion is reached that, unlike what happens in the competition, the staff does not offer good customer service, and the solution would be to train them on the subject.

Example: once the information was collected through the surveys, the data were counted, tabulated, and analyzed, and the following conclusions were obtained:

• Launching a new brand of men’s shirts on the market is feasible since there is sufficient demand and the consumer who makes up the target audience is willing to try a new brand of shirts as long as it is of good quality.
• The first thing that a consumer who makes up the target audience notices when deciding to buy a shirt is the model and the quality of the fabric.
• There is a preference for striking models and light colors.
• The consumer who makes up the target audience usually buys their shirts at department stores.
• The average price you usually pay for a shirt is US$25.

8. Make decisions or design strategies

Finally, once the information collected has been analyzed and conclusions obtained, decisions are made or strategies designed based on the analysis carried out and the conclusions obtained.

For example, after having analyzed the information collected and having come to the conclusion that launching a new product on the market is feasible, in addition to having learned more about the tastes and preferences of consumers, the decision is made to launch the new product. to the market, and proceeds to design and produce it, paying special attention to the characteristics that satisfy said tastes and preferences.

Or, for example, after having analyzed the information collected and having come to the conclusion that the cause of the decrease in sales is poor customer service on the part of the staff, we proceed to provide them with greater training that refers to customer service and to improve the customer selection process.

At this point, it may be necessary to put the development and results of the market research in writing and present it to the appropriate party.

Example: once we have analyzed the information collected and mainly concluded that launching a new brand of shirts on the market is feasible, we move on to make the following decisions or design the following strategies:

• The decision is made to introduce the new brand of shirts to the market.
• We proceed with the design and construction of the shirts, paying special attention to the quality of the fabric and the design of striking models based on light colors.
• Contact is made with different intermediaries that serve as points of sale, giving priority to department stores.
• The decision is made that the selling price of each shirt will be US$20.

Market research example

In addition to the example that we have been developing in each of the steps in the previous section, below we present another example of the development of market research:

1. Determine the need for the research :

We proceed to carry out market research that allows us to know the feasibility of opening a bar, in addition to knowing the characteristics of the target audience and future competition to make better decisions and design more effective strategies.

2. Establish the objectives of the research :

After determining the need to carry out market research, it is determined that it will have the following objectives:

• know and analyze the bar sector.
• know the acceptance that a new bar could have.
• know the tastes, preferences, customs, and habits of the consumers who make up the target audience concerning the bar business.
• Know the main strategies, strengths, and weaknesses of the future competition.

3. Identify the information to collect :

To meet the objectives of the research, it is determined that the information to be collected will be the following:

• the situation in which the bar sector finds itself.
• the acceptance of a new bar by the target audience.
• the main drinks and meals that the target audience prefers in a bar.
• the concept or theme you prefer for a bar.
• the main competing bars.
• the main drinks and meals offered by competing bars, their main strategies to attract and retain customers, and their main strengths and weaknesses.

4. Determine the sources of information :

The sources of information from which the required information will be obtained will be the following:

• Primary sources: consumers who make up the target audience, future competition, and former employees.
• Secondary sources: reports and publications related to the bar sector.

5. Select and develop information collection techniques :

The information collection techniques that will be used to collect the required information will be the following:

• Observation technique: reports and publications related to the bar sector will be observed, consumers will be observed when they go to future competitors’ bars, and future competitors will be observed in terms of the service provided. , theme and decoration of the premises, and drinks and meals offered.
• survey technique: a representative sample of consumers who make up the target audience will be surveyed. The questions that the survey questionnaire will include will be the following:
  • Do you go to bars?
  • How often do you go to a bar?
  • How much do you usually spend on average in a bar?
  • What drinks do you usually order?
  • What foods do you usually order?
  • What is your favorite concept or theme for a bar?
  • What do you like most about a bar?
  • What bars do you usually go to?
  • Would you be willing to go to a new bar?
• interview technique: brief interviews will be carried out with former workers of the future competition, where they will be consulted about the bar business, as well as the main strategies and strengths and weaknesses of the bar where they worked.

6. Collect information :

To make the information collection effective, we go to government entities and the Internet to review reports and publications on the bar sector, and we visit the bars of future competitors and observe the behavior of consumers, the most ordered drinks and meals, the attention provided, and the theme and decoration of the premises.

Likewise, we appoint those in charge of carrying out the surveys to the target audience, coordinate and direct the survey, and contact former employees of the future competition and consult them about the bar business, and the main strategies strengths, and weaknesses of the business. bar where they worked.

7. Analyze the information :

After having collected the required information, the data were counted, processed, and analyzed, and the following conclusions were obtained:

• The bar sector is a sector with good projections due mainly to the promotion of national drinks that the government is carrying out, and which has consequently generated a greater influx of public to the places where they are offered.
• The consumers who make up the target audience are willing to go to a new bar, as long as it offers good drinks and food, good service, and a pleasant atmosphere.
• the competition is high; However, most bars do not differ much from the others, so the best way to face the competition would be to have a differentiation that could be made up of innovative drinks and/or a striking theme.

8. Present the results :

We put in writing the development and results of the market research that we have carried out (the need to carry it out, the objectives, the information that was collected, the sources from which it was obtained, and the techniques that were used to collect it, including the survey questionnaire carried out, as well as the tabulation of the results and conclusions obtained from the analysis of the information), and we include it in our business plan, in the corresponding section.