What Is Market Research?

Summary: Market research is a structured process to identify, gather, and analyze information to support business decisions. Market research can provide insights into the customer journey and guide decisions related to product development, marketing strategy, pricing strategy, and points of sales (online and offline) to create a customer experience that supports customer acquisition and retention.

8 minutes to read. By author Michaela Mora on July 10, 2021
Topics: Relevant Methods & Tips, Business Strategy, Market Research

What is Market Research
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Market research is a discipline with roots in psychology and sociology and involves the identification, collection, analysis, and use of information to make business decisions.

Market research and marketing research are so connected that the nuances are lost and both terms are used interchangeably in practice. For this article, I’ll use the term market research.

We use market research to identify and solve problems in different business areas, often connected to the four Ps in marketing:

  • Product
  • Price
  • Place (distribution, point of sale)
  • Promotion (advertising)

Overall, these four aspects of any product or service are drivers of the customer experience as customers interact with each of them through the customer journey from product development, pre-sale, point-of-sale, and post-sale.

Market Research to Identify Problems

The use of market research to identify problems aims at the discovery of what we don’t know. It is often called “generative research” in the context of product development as we look for new product ideas. At a very high level is exploratory in its goals and it can use qualitative and quantitative data collection and analysis techniques.

We use market research for problem discovery when we design research to:

  • Identify unmet market needs and their market potential.
  • Size the market share for specific products or services.
  • Monitor brand image issues of our brand and competitors.
  • Profile market segments.
  • Analyze sales trends.
  • Forecast future trends.
  • Identify business trends.

Market Research to Solve Problems

Once a business discovers market opportunities through an understanding of unmet needs, or issues related to its branding, pricing of distribution that may impact the customer experience, the next step is to generate solutions and validate them.

The solutions may be new products and services, new product features to improve the customer experience, a pricing strategy, a brand positioning, a marketing strategy including customization of marketing messages and content for different marketing channels, a redesign of points of sales (online and offline), an internal reorganization to align systems and employees with the customer experience, etc.

For each need or issue discovered there are many potential solutions limited by resources available to the business. The more limited the resources are, the higher the need to use them effectively. Market research can help design solutions for high business impact.

We use market research to solve problems when we design research to:

  • Identify actionable market segments for products or services (digital or physical)
  • Develop new products (digital or physical)
  • Establish a pricing strategy and identify optimal price points.
  • Determine effective ways to advertise products and services and optimize marketing channels.
  • Identify distribution issues and barriers to the path to purchase.
  • Improve customer experience to support customer acquisition and retention strategies.

The Market Research Process

For any given market research project, the process usually includes six major steps:

  1. Business problem definition and translation to a research problem
  2. Development of an approach to the research problem
  3. Research design selection
  4. Data collection or fieldwork
  5. Analysis
  6. Reporting

Market Research Design Categories

There are different ways to categorize market research depending on:

  • The focus on the problem at hand: Primary vs. Secondary.
  • The research design goal: Exploratory vs. Descriptive, vs. Causal
  • The type of data and collection methods used: Qualitative vs. Quantitative.

Each of these categories helps us guide how to select different research designs, data collection methods, and analysis techniques to gather the information we need to help solve the research problem and provide insights to support business decisions.

Primary Vs. Secondary

First, we try to determine whether we need to conduct secondary or primary research.

Primary research is based on data collection designed to address specific problems.

Secondary research is based on data that have already been collected for other purposes but may be related to the topic at hand. Secondary research should be a prerequisite to the collection of primary data, which would be appropriate when the secondary data sources have been exhausted or yield minimal returns.

Exploratory vs. Descriptive vs. Causal

Exploratory research designs are used to provide insights into problems we don’t fully understand or have not been discovered yet. This is often the type of research we start with when we use market research to identify problems.

We conduct descriptive market research when we try to describe characteristics of target markets or segments of interest, frequency of certain behaviors, attitudes, and perceptions, market trends, etc.

Causal market research, on the other hand, tries to find evidence of cause-and-effect relationships to understand which variables are the cause of behaviors, attitudes, perceptions, or other phenomena of interest.

Qualitative vs. Quantitative

This categorization helps us separate data collection and analysis methods based on their:

  1. Objectives.
  2. Sample design.
  3. Type of data and analysis they allow.
  4. Type of decisions they support.

Generally, qualitative research helps us explore and get a deeper understanding of a problem, while we use quantitative research to quantify and validate findings and test hypotheses. The latter may come from qualitative research, secondary research, or just assumptions made by the business.

Note that different combinations of the four criteria mentioned may render a research design qualitative or quantitative. For example, surveys with small samples may provide only directional results more appropriate for qualitative analysis.

Primary Market Research Data Collection Methods

As describe above, once we decide to design research to answer a specific business and research problem, we are on our way to conduct primary research.

We use a myriad of data collection methods in primary market research depending on the research objectives and research design selected.

Ideally, we should combine qualitative and quantitative methods since they provide different types of data and insights.

Qualitative Research

Qualitative Research is one type of exploratory market research methodology based on semi-structured or unstructured data collection. Data collection methods used in primary qualitative research can be classified as direct or indirect.

Direct methods are those in which we disclose the research objective to participants. These data collection methods include:

Indirect methods are those for which the true purpose of the research is not disclosed to participants. These are based on projective techniques, which are unstructured questioning techniques to encourage respondents to reveal underlying motivations, beliefs, attitudes, and feelings regarding particular issues.

These techniques are usually embedded into direct data collection methods and are classified into four major groups:

  • Association
  • Completion
  • Construction
  • Expressive

Quantitative Research

Primary quantitative data collection methods include surveys and observational methods.

Surveys involve the administration of a questionnaire through different modes (online, phone, mail, in-person) to groups of interest. As a best practice, we try to always use qualitative research to design good surveys.

We use the survey format, particularly in the online mode, to implement many different question types that sometimes are considered “research methods” by those new to research, especially in the UX field. Surveys used in online unmoderated, remote usability tests are an example.

These are just surveys with very special question formats for very specific purposes.

Observation, on the other hand, doesn’t include communicating with the people being observed and can be conducted through different structured and unstructured, direct and indirect methods and performed in natural or lab environments.

Quantitative observational methods include:

  • Digital transaction/behavior tracking (e.g., sales tracking, web traffic tracking, A/B testing).
  • Biometric measurement
  • Audit and inventory analysis.
  • Content analysis.
  • Trace analysis from past behaviors.

Although these data collection methods are very different, they should not be seen as mutually exclusive. Each method has advantages and disadvantages and can be used productively in combination.

Market Research Career

To emphasize the value of market research in supporting business decisions and get away from being mainly associated with data collection, the market research industry went through a rebranding process a few years ago. The American Market Research Association is now called the Insights Association, and many market researchers have changed their titles to “Insights” professionals.

You will find insights professionals in research agencies, like ours, and in nonprofit and profit organizations. The latter group is often referred to as corporate researchers. They often in a group within the marketing department or as independent centralized function serving other departments or functional areas in a company. Nowadays, this group goes by names such as “Customer Insights,” “Insights & Analytics,” “Voice of the Customer,” “Consumer Insights,” and the like.

As of 2021, many digital-first companies don’t have a market research/consumer insight group. These companies tend to be organized around digital products (app, software, online service) and prioritize UX research if any research is conducted at all.

Unfortunately, many don’t understand that UX research is a specific application of market research used to solve a particular set of problems.

Market researchers in agencies or inside organizations are involved with all or some steps of the research process depending on whether they do the work themselves or partner with other research vendors in the market research ecosystem.

Market Research Ecosystem

There are many specialists in the market research echo system offering services in line with different steps of the research process or servicing specific industries.

Overall, the market research ecosystem includes providers in areas such as:

  • Participant sample (online panels, phone list, mail lists, qualitative panels)
  • Data collection tools for different modes (online survey tools, online qualitative tools, phone surveys, mail surveys, eye tracking, biometrics, usability testing tools)
  • In-person interviewing services (for onsite, intercept interviews at public places, stores, etc.)
  • Mystery shopping services
  • Facilities for in-person research (focus groups, interviews, food testing, product testing)
  • Data aggregators (syndicated data services, omnibus services)
  • Qualitative moderation (focus group moderators, in-depth interview moderators)
  • Analytic software tools (Tools for statistical analyses, crosstabulations, advanced procedures, text analytics)
  • Panel and community technology platforms (to create proprietary panels and branded research communities)
  • Recruitment services (for qualitative research and hard to reach audiences)
  • Open-ended question coding services
  • Transcription services
  • Data and reporting visualization tools
  • Software development for specific applications and methodologies

Conclusion

I hope this summary gives you an idea of what the market research/insights profession is about and how this discipline can be used to find information needed to support business decisions.

Many who are not familiar with the field confuse market research with specific data collection methods (e.g., surveys, focus groups) and tools that facilitate data collection (e.g., online survey tools), but market research is more than its tools.

As researchers, we need to have expertise in research methodology to avoid providing biased insights. This knowledge of methodology is applied in the context of business problems related to product development, customer experience, branding, and financial outcomes. Our goal is to guide decisions that have a business impact.

To read more about how to use market research, check the article 10 Key Pieces of Advice On How to Do And Use Market Research.