What is Market Research?

Sherry Holetzky

Market research involves testing the pool of possible consumers to determine people's interest in a particular product or service, especially among different demographics. It is used to establish which portion of the population will or does purchase a product, based on age, gender, location, income level, and many other variables. This research allows companies to learn more about past, current, and potential customers, including their specific likes and dislikes.

Market research provides companies with information on consumer preferences regarding their products.
Market research provides companies with information on consumer preferences regarding their products.

Based on market research data, businesses can develop a "target audience," which is a specific group of customers that has a distinct need or desire for a product or service. The research is used to determine how often the target audience will buy a particular item, how much they are willing to pay for it, and their overall satisfaction with it. By analyzing this information, manufacturers and service providers learn where to focus their resources most effectively.

Research also helps companies develop information regarding new products.
Research also helps companies develop information regarding new products.

For example, mature men and women are most likely to buy a hair product that covers gray. Advertising for such a product would obviously target adults, perhaps those 30 years old and older. It makes no sense to waste money and effort advertising it to teen girls. On the same note, if a product should be popular among different demographics, but seems to be selling to only one group, a company may hire a market research team to find out why. Through the data collected, the company can learn how to make the product more attractive to other audiences or how to advertise it better.

Qualitative data, typically gathered through interviews, can help market researchers determine the popular opinion.
Qualitative data, typically gathered through interviews, can help market researchers determine the popular opinion.

Research also helps companies develop information regarding new products or product lines and learn how well new items will be received. It can also help businesses learn how the public responds to a comparable product already on the market. In this way, business can stay in the loop, keeping in touch with the wants and needs of potential consumers. They can halt production of a product that the public shows little or no interest in, or change it, improve it, or lower the price as necessary.

Market research includes what customers are saying online about a company.
Market research includes what customers are saying online about a company.
Market research may examine feedback from participants with similar interests.
Market research may examine feedback from participants with similar interests.
Companies may use phone surveys to conduct market research.
Companies may use phone surveys to conduct market research.

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Discussion Comments

anon163782

@ Anon15331: Because it can tell them what the customers want.

anon35320

what is the career path in the market research companies?

anon15331

how does research lead to the success of the business?

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