Marketing research or market research provides the link from the marketing department to consumers, customers and the public. It is designed to meet the company’s information needs in order to make valid marketing decisions. It involves the collection and collation of information: the systematic gathering, analysis and interpretation of data on conditions and developments in markets.
For example, studies can help answer specific questions about potential customers, they can be used to identify opportunities and problems in the market and to design marketing actions or to back up decisions and monitor marketing performance.
Market research goals
Maximizing success: increasing the success of products and services, in particular increasing the success of new product launches
Decision-making security: early and timely recognition of trends, opportunities and risks in the markets and customer segments relevant to the company
Flop minimization: Limiting the risk of wrong decisions
- Maximizing success: increasing the success of products and services, in particular increasing the success of new product launches
- Decision-making security: early and timely recognition of trends, opportunities and risks in the markets and customer segments relevant to the company
- Flop minimization: Limiting the risk of wrong decisions
Tasks of marketing research
In any company, marketing research can perform the following important functions:
- Selection and preparation of information
- Reduction of uncertainties (e.g. by verifying data)
- Structuring of plans
- Advising management (e.g. on communication strategy)
- Promotion of innovation
- Recognition of risks (e.g. change in purchasing power, change in consumer behavior)
The task of market research is to make the relevant information for entrepreneurial action accessible to measurement (operationalization) and to provide indications for a forward-looking design of reality through explanation and prognosis.
Primary research vs. Secondary research
In market research, a distinction is made between primary research (field research) and secondary research or (desk research).
In primary research, the necessary data material is collected specifically for the information problem to be solved. A separate study is conducted with the market participants. Primary research can be carried out by questioning, observation or by means of an experiment. Companies usually hire (specialized) market research institutes for their primary research. The most important advantage of primary research is: You collect exactly the data you need.
Secondary research involves reanalyzing data that was primarily collected for other purposes and originally processed and evaluated as part of earlier studies. Secondary analyses are carried out both to verify hypotheses originally formulated and to address completely new questions. For this purpose, a company has internal data (e.g., data from its own accounting department, cost accounting, customer file) but also external data (e.g., data from the Federal Statistical Office, panel data from market research companies) at its disposal.
Qualitative vs. Quantitative Research
Quantitative and qualitative research are alternative methods of gathering information and can also be combined. A qualitative survey following a quantitative survey provides details and depth needed for a better understanding of the data and the conclusions to be drawn from it.
Quantitative market research is all about hard facts and standardized data. Concrete numerical values are recorded, which are then analyzed using mathematical-statistical methods. In this way, quantities, frequencies and statistical correlations can be determined. They are often used to test hypotheses for their correctness (deductive research). Important methods are the standardized survey / online survey and the experiment / test.
Qualitative research is concerned with results that are non-numerical in nature, such as impressions, opinions and views, and with understanding phenomena. The most important methods of qualitative market research are group discussion, (in-depth) interview, observation and psychological testing. Qualitative market research basically works with small samples and open questions (inductive research).
Types of studies
Depending on the level of knowledge about a topic, there are different approaches to gaining knowledge.
The goal of an exploratory study is to gather initial preliminary information that helps define the problem and form hypotheses. This type of study is used, for example, in basic research when little is yet known about a topic.
If there is already prior knowledge on a topic and detailed information on this topic is of interest, this is usually done by means of a descriptive study. The aim is to estimate frequencies and proportions, for example to determine the market potential for a product or the attitudes toward a product.
Explanative studies (hypothesis-testing studies) test hypotheses to see whether they can be confirmed or refuted. They represent the most common type of investigation in quantitative psychological research and are aimed at explanations. The aim of an explanatory study is to test a causal hypothesis. In doing so, one draws conclusions from a sample to a population.
Here, the focus is on the investigation of cause and effect (causal research). Hypotheses about cause-effect relationships, i.e. relationships between different variables, are tested. By means of an experiment, one tries to find out whether a relationship is causal or not. One wants to know which variable is the cause and which effect it has. Furthermore, one is interested in the relationship between the causal variables and the expected effect.
An example: A chocolate manufacturer wants to know whether he can achieve more sales with a new packaging design. He can now conduct a descriptive study and ask the target group how likely they would be to buy the chocolate in the new packaging. But he can also conduct a packaging test in two stores: In one store the chocolate is sold in the previous packaging, in the second store in the new packaging. Based on the difference in the sales figures measured, he answers the question: Does the new design affect chocolate sales? What effect does it have? This type of A-B testing is also used to test the UI design of web stores.
The classic market research process includes 5 phases, the so-called 5 D’s:
- Definition of the problem
- Data acquisition
- Data analysis
- Documentation, interpretation and application
What’s the problem? You determine which problem is to be solved. Is it about a packaging design or about the awareness of a product?
Which design? It is about determining timing, description of the incidence, operationalization of the variables, type of study / type of survey and form of evaluation.
Which data? It is a matter of determining how the survey data will be obtained, e.g., through face-to-face (CAPI – computer assisted personal interview), written (PAPI – paper and pencil interview), telephone (CATI – computer assisted telephone interview), internet-based (CAWI – computer assisted web interview), etc.
Which evaluation? Here, it is a question of how the data is to be evaluated, which statistical-mathematical procedures are used. For example, if you want to know for which design the customer is willing to spend twenty percent more on a car, conjoint analysis can help you find out.
What conclusions? The final phase is the preparation, interpretation and application of the data. In addition to text, graphically prepared tables, infographics, charts and can illustrate the study results and conclusions.