Market research is considered a necessary expense and an investment in the success of a business. Since market research cost is often high, companies expect a significant return on this investment. There are many marketing success instances, but also numerous failures when research has not been executed properly. Every company should be able to distinguish trustworthy market research from findings that do not provide value.
What Is Market Research?
Market research is the means of finding valuable information about an industry, competing companies, past and potential customers, and the general market. It involves looking at company fundamentals, sector, and likely demand for products.
Market research is conducted either in-house, or it is outsourced. Information for research can be secondary, or reports that have already been generated and accessed by others or primary, which is original research conducted on behalf of a specific company. Market research often combines primary and secondary information and measures quantitative and qualitative factors.
What to Expect from Market Research
It is vital to have clear objectives before embarking on research. This involves thinking about what questions the report should answer and the company’s long and short-term goals. Is there a specific product launch that the research is aimed at or the general view of the brand?
Information should be thorough and not extraneous. A suitable report should provide in-depth data on those areas that are essential for business. For instance, if the question is how to make products more appealing in China, market research should focus on how similar products have fared in China recently compared to other countries.
A reliable market report should combine quantitative and qualitative data using a sufficiently large and appropriate sample. The methodology should be relevant and answer the questions. For instance, if the aim is to get an idea of how consumers feel about a product, the focus group should have adequate time to sample the actual product. A comprehensive approach is usually best for market research, but it should be sufficiently focused to provide solutions.
Can We Trust Market Research?
Market research can be inherently flawed if it is not conducted correctly or does not use metrics useful to answer the essential questions. There are several ways of determining if the market research is trustworthy or not.
A report may not define its methodologies, use the wrong ones, or do something wrong with the research. Some reports may provide statistics and data results but do not indicate how those numbers were reached. Other reports might use surveys where focus groups would have been more relevant or vice versa.
Another issue could be that the sample size was not large enough or did not reflect the target audience. For instance, if a company needs to find out if a product will perform well in a specific state in the U.S and if the sample group contains an equal number from each area of the U.S., the focus group or survey will not answer the question.
A more effective approach would be to have half of the participants from the area being tested and a control group made of participants from other regions. Other problems with methodology could arise if members of focus groups seem easily influenced by the majority opinion or if compensation is given in such a way as to affect the feedback provided by participants.
Information could be missing or insufficient. This could be due to poor communication before researching what information should be given or point to a problem with the research. The fuller the picture created, the clearer idea a company has of the market and industry, and incomplete information is like a puzzle with a piece missing.
If the missing information is primary, it can be hard to retrieve it since a focus group can’t easily be replicated. However, the gaps can be filled with secondary data, depending on the omission, but having to compensate for poor research adds to the process’s time and expense. Finding researchers who will get it right the first time is essential.
Poor segmentation is also a hazard of mediocre market research. If a study incorrectly includes living room couches in a study of patio furniture or all shoe categories in research explicitly designed to be about sports shoes, the results will be unhelpful.
Is Market Research Worth It?
Good market research points a company in the right direction regarding products and services. It requires significant time and consideration to find the best research companies, to discover their methods, and look at their track record. A company should also define research parameters by short and long-term objectives, questions that should be answered, and budget considerations.
Start with an investigation before actual market research. See who responds to ads to get an idea of what type of customers should be surveyed or included in a focus group. Look at what secondary data can be accessed and what information the company already has. This will prevent paying for duplicate data.
For market research to create a solid return on the time and money invested in it, taking the time to investigate options and defining the study’s goals is essential. Careful consideration and attention to detail can make market research reliable and successful.