how market research works
market research is used to determine the viability of a new product or service the results may be used to revise the product design and fine tune the strategy for introducing it to the public this can include information gathered for the purpose of determining market segmentation it also informs product differentiation which is used to tailor advertising a business engages in various tasks to complete the market research process it gathers information based on the market sector being targeted by the product this information is then analyzed and relevant data points are interpreted to draw conclusions about how the product may be optimally designed and marketed to the market segment for which it is intended it is a critical component in the research and development r d phase of a new product or service introduction market research can be conducted in many different ways including surveys product testing interviews and focus groups market research is a critical tool that companies use to understand what consumers want develop products that those consumers will use and maintain a competitive advantage over other companies in their industry primary market research vs secondary market researchmarket research usually consists of a combination of primary research generally falls into two categories exploratory and specific research all market research is informed by the findings of other researchers about the needs and wants of consumers today much of this research can be found online secondary research can include population information from government census data trade association research reports polling results and research from other businesses operating in the same market sector history of market researchformal market research began in germany during the 1920s in the united states it soon took off with the advent of the golden age of radio 1companies that created advertisements for this new entertainment medium began to look at the demographics of the audiences who listened to each of the radio plays music programs and comedy skits that were presented they had once tried to reach the widest possible audience by placing their messages on billboards or in the most popular magazines with radio programming they had the chance to target rural or urban consumers teenagers or families and judge the results by the sales numbers that followed types of market researchfrom their earliest days market research companies would interview people on the street about the newspapers and magazines that they read regularly and ask whether they recalled any of the ads or brands that were published in them data collected from these interviews were compared to the circulation of the publication to determine the effectiveness of those ads market research and surveys were adapted from these early techniques to get a strong understanding of your market it s essential to understand demand market size economic indicators location market saturation and pricing 2a focus group is a small number of representative consumers chosen to try a product or watch an advertisement afterward the group is asked for feedback on their perceptions of the product the company s brand or competing products the company then takes that information and makes decisions about what to do with the product or service whether that s releasing it making changes or abandoning it altogether the man on the street interview technique soon gave way to the telephone interview a telephone interviewer could collect information in a more efficient and cost effective fashion telephone research was a preferred tactic of market researchers for many years it has become much more difficult in recent years as landline phone service dwindles and is replaced by less accessible mobile phones as an alternative to focus groups surveys represent a cost effective way to determine consumer attitudes without having to interview anyone in person consumers are sent surveys in the mail usually with a coupon or voucher to incentivize participation these surveys help determine how consumers feel about the product brand and price point with people spending more time online market research activities have shifted online as well data collection still uses a survey style form but instead of companies actively seeking participants by finding them on the street or cold calling them on the phone people can choose to sign up take surveys and offer opinions when they have time this makes the process far less intrusive and less rushed since people can participate on their own time and of their own volition 