The market is the place where supply and demand meet. This meeting of suppliers and buyers (customers) is about an economic asset, a product, or service. The basic principle of the market is the exchange of goods for a re­cog­nised equi­val­ent, e.g. other goods or money. Market research is used to determine what a customer wants to buy and how much they would exchange it for.

With market research, a company can analyse which of its products are popular and which need im­prove­ment. Market research also uncovers in­form­a­tion relevant to companies and target groups, such as prices and pricing range. This allows a company to make ad­just­ments to the product, change ad­vert­ising strategies, and make decisions for future business dir­ec­tions and products.

Defin­i­tion

Market research is the sys­tem­at­ic col­lec­tion and analysis of data on the market are char­ac­ter­ist­ics of an industry. In certain market situ­ations, companies need this data in order to further develop their products or services and better adapt them to their customers. Market research thus serves as a marketing tool and is always used when a company wants to analyse the current market situation or assess market risks. It is also possible to determine in advance whether an offer is mar­ket­able at all through market research measures.

What is the purpose of market research?

Market research provides in­form­a­tion on the situation of the market. This in­form­a­tion is important for a company to make customer-oriented decisions and not lose sight of the target group. Fur­ther­more, market research can identify trends and use them for the further de­vel­op­ment of products as well as for other business decisions.

Via a product clinic – an analysis concept developed by Horst Wil­der­mann – companies can collect customer options on a par­tic­u­lar product by having it in­de­pend­ently tested. Using the collected results, they can revise the product and make it more customer-oriented. Companies even use this method to assess competing products. In addition, market research can be used to find in­dic­a­tions of the successes and failures of a product and the company in general.

In the long run, regular market research will help your company to move forward and make prof­it­able decisions.

The purposes of market research include, but are not limited to, the following:

Early warning Risks are more pre­dict­able and can be iden­ti­fied at an early stage
In­nov­a­tion Op­por­tun­ites and de­vel­op­ments can be an­ti­cip­ated and uncovered
Reduce un­cer­tainty Helps specify the facts during the decision-making process
Struc­tur­ing Promotes the un­der­stand­ing of the target and learning processes
In­tel­li­gence building Supports the work of corporate man­age­ment and con­trib­utes to in­tel­li­gence-building processes
In­form­a­tion selection Company-relevant in­form­a­tion can be selected and processed amid the flood of in­form­a­tion

Types of market research

In market research, a dis­tinc­tion is made between the type of object studied and the type of in­form­a­tion gathered. Both species can be divided into two further cat­egor­ies.

The type of object studied includes demo­scop­ic market research and ecoscopic market research. The former examines sub­ject­ive and objective in­form­a­tion about a person, focusing on the in­di­vidu­al consumer and collects demo­graph­ic data. Ecoscopic market research, on the other hand, focuses on the industry’s objective market size. This includes the quality and quantity of goods or price of goods. Fur­ther­more, pro­cure­ments and sales market struc­tures are examined, as well as buyer and supplier numbers.

Gathering in­form­a­tion generally deals spe­cific­ally with the col­lec­tion of company-relevant data. There are two sub­cat­egor­ies of this: primary and secondary research. With primary research, you conduct your own surveys according to self-chosen criteria in order to collect data about customers. With secondary research, surveys are carried out and evaluated using criteria and tests de­term­ined by third parties.

In addition, there is a fun­da­ment­al dif­fer­en­ti­ation between quant­it­at­ive and qual­it­at­ive market research:

  • Quant­it­at­ive market research: Meas­ur­able values about a market are stat­ist­ic­ally evaluated using ex­per­i­ence. This can meet objective or sub­ject­ive factors.
  • Qual­it­at­ive market research: With this method a customer’s opinions, ex­pect­a­tions, and motives are con­sidered. A fre­quently used method here is opinion research.

What does market research consist of?

The need for in­form­a­tion is normally derived from a decision-making problem: a company faces a problem and wants the help of market research to resolve it. The research can be seen as a struc­tured process. This goes through many phases, with data collected in each.

The process of market research can be divided into six phases. The first phase decides what in­form­a­tion is important for the company and what is not: from this, an object of in­vest­ig­a­tion is defined. In the second phase, a method of use is decided upon. In the third, survey documents are drawn up to be used for further work. The fourth phase consists of the data being collected via surveys or tests.

During the fifth phase, data is processed and evaluated, before finally being presented by the market re­search­ers in the sixth and final phase. Reasons for the results of the findings and ideas for changes to be made are then also worked out. Sub­sequently, any decision for further actions to be made by the company are based on the in­form­a­tion obtained.  

Overview of the phases of market research:

Phase 1 Choose what in­form­a­tion field to in­vest­ig­ate
Phase 2 Determine the methods you will use
Phase 3 Create surveys
Phase 4 Collect data from surveys
Phase 5 Process and evaluate the data
Phase 6 Present your findings

Why is market research important?

Market research insights build a secure found­a­tion for the diagnosis and prognosis for a future market entry or product de­vel­op­ment. With this in­form­a­tion, a company can plan and steer its business in the right direction and find and correct mistakes. Market research also helps a company to set prices: how much are customers willing to pay for certain items?

Market research is in­dis­pens­able for product de­vel­op­ment. Customers can directly test the products and offer their free opinions. This is how you determine the needs and wishes of potential customers: having the product tested by the consumer them­selves shows precisely what they want.

Summary

Without market research it’s difficult to make important company decisions. Through the col­lec­tion of in­form­a­tion and resulting eval­u­ations, company ex­ec­ut­ives are able to make decisions about products, services, and pricing with more certainty.

Please note the legal dis­claim­er relating to this article.

Reviewer

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