Market Research

Types of Market Research

There are two branches of market research depending on the organisation's objectives. Firstly, the firm must decide whether to conduct primary or secondary research. Secondly, the researcher must decide whether to use quantitative or qualitative tactics. Let's now take a look at these four types of market research.

Primary market research

Primary market research is sometimes called 'field research' because the researcher needs to take a direct approach to collect data. This is a type of research that an organisation plans itself and involves collecting new data that has not been gathered before.

Primary research involves collecting data based on a research problem or question that is specific and unique to the business. Primary market research can be carried out by the company itself or an external organisation, but the data collected will be brand new. It often involves gathering data on the business's existing customers. Primary data are collected through surveys, focus groups, interviews, and questionnaires.

Secondary market research

Secondary data has been collected before for purposes other than the research question or problem at hand. Secondary data can be collected both internally and externally. This could include things like sales and inventory records of the company (internal), internet research (external), market reports (external), or information from the U.K. Census (external).

Secondary research is often referred to as 'desk research' as it can be conducted from your desk. Your role as a secondary researcher is to find data relevant to your business research objectives.

Figure 1 below outlines the main differences between the two types of market research. There are advantages and disadvantages to both primary and secondary research. The type of research chosen will depend on the objectives and aims your business is trying to achieve.

Fig. 1. Two types of market research, StudySmarter

Market Research: qualitative research

This research tries to describe specific situations and understand characteristics, opinions, concepts, and experiences. It is used to understand complicated customer motivations that are difficult to study with quantitative methods. It is also used to illustrate the impacts of different factors on customer decision-making.

Qualitative data is usually collected from smaller sample sizes. The goal of this type of research is to question and observe what people say, do, and how they react to certain situations or ideas. Questions are usually open-ended, and it is up to the respondent how they answer each question (no predetermined answers).

Market Research: quantitative research

Quantitative research usually involves structured questions, where responses to those questions are predetermined, and respondents choose between one of the predetermined answers. Sample sizes are generally larger (more people surveyed).

For instance, understanding age's effect on the number of clothes customers purchase each month is an example of a quantitative research project.

Marketing Research Process

Now that we understand why organisations conduct market research let's explore the process behind it. The marketing research process is made up of six steps (see Figure 2 below).

1. Define the research problem and objectives

During this step, the researcher needs to define the problem they are trying to solve with their research. It is vital to make sure that the problem the researcher decides to focus on is not too broad. The researcher then has to define their objectives and decide on the type of research they will conduct:

• Descriptive - describe a situation, event, market, or customer group.

• Exploratory - collecting preliminary information to understand the problem and develop hypotheses.

• Causal - exploring cause and effect relationships.

2. Develop the research plan

The researcher then has to develop the research plan. During this step, they decide whether they will be collecting primary or secondary data and the type of research method they will use (surveys, focus groups, etc.). This step also involves coming up with a sampling plan. Sampling could either be:

• Random - all people in the sample group have an equal chance of being selected.

• Convenience - choosing the people that volunteer to take part in the research.

• Judgement - deliberately choosing certain people to sample.

3. Collect the data

During this step, the researcher conducts the research.

4. Data analysis

During this step, the researcher uses various statistical tools if they are conducting quantitative research or analyses different interviews if they are conducting qualitative research.

5. Present findings

During this step, the researcher will format their analysis and data into detailed insights - translate data into valuable recommendations for managers.

6. Make a decision

This is where the organisation would decide how to tackle the problem they were researching with the researcher's findings. For example, this step could involve a decision on whether to launch a new product or not.

Market Research Examples

Let's now take a look at a few market research examples.

Example of primary market research

A popular type of primary market research is surveys. You can customise your survey to be as short or as extensive as you wish. Surveys can be digital, received via email, for example, or in a physical form, like a card you receive to share your thoughts after staying in a hotel. Surveys are helpful when you want to measure something specific.

Answers to these questions are then analysed and turned into valuable data and actionable insights.

Example of secondary market research

Secondary market research can take several forms. Consider the example below, which outlines how a marketer might combine various secondary sources.

How to do market research for a startup?

Founders often establish startups to address a problem in the market or to take advantage of certain opportunities other organisations have not yet addressed. However, conducting market research for a startup is similar to that of an established company. Once the startup has its main idea, it must:

1. Define the research problem and objectives,

2. Choose a research approach and create the research plan,

3. Collect and analyse data,

4. Interpret and present findings,

5. Make a decision.

Similar to other forms of market research, startup market research also aims to understand markets and consumer behaviour. However, it is crucial for startups to also conduct extensive environmental and competitor analysis before launching the research and development of a new product. Having a cohesive market research plan and understanding the ins and outs of an industry or market will also increase the chances of investment into the startup.