Marketers need to find new ways to reach their target groups in the age of Digitalization effectively. To understand the purchase decision processes of potential customers, the methods and tasks of market research come into play.
The ability of companies to influence the purchasing decisions of their potential customers through market research is more limited today than in the past since more and more users are mainly using the Internet.
Companies must adapt their marketing strategies and align them with the changed purchasing behavior of consumers.
The changes are illustrated quite well with the following three statistics:
- 90% of all Instagram users follow at least one business
- 63% of smartphone users are more likely to buy from companies’ apps or mobile websites that show them product recommendations
- Customers delete emails displayed incorrectly or incompletely on mobile devices, often within three seconds.
These developments mean that their previous strategies have lost effectiveness for companies, and they must find new ways to reach their target groups effectively.
Companies should deal with the purchase decision processes of their potential customers to understand them precisely in the first place, and this is where market research comes into play.
Because it provides insights about products, target groups, and competitors, before we go into detail, here is a brief concept of market research introduction.
- Tasks and objectives
- Form
- Methods
- Online market research
- How it works
What is market research?
Market research involves collecting, analyzing, and interpreting data on sales, markets, and consumers, securing marketing and product decisions.
In order to generate objective, representative, and relevant data effectively, market research proceeds systematically and with the help of scientific methods.
Tasks and objectives of market analysis and opinion research
Market research has a complex and extensive influence on companies’ strategy development and implementation. It deals with fundamental market, strength and weakness analyses, and market development.
Instead, the concrete selection, planning, and conception of marketing and product decisions up to the control of the implemented measures are within their area of competence.
This broad range of market research tasks is divided into four areas:
1. Excitation function
The market analysis intends to provide companies with information on current trends and developments to make marketing decisions. Ideally, market research also contributes its ideas for meaningful marketing measures.
2. Market research for forecasting
Market research should predict & consider the current market situation and its development. They are predesigned as an early warning system to encourage companies in good time to change their strategy or positioning appropriately and to develop the necessary innovations.
3. Market research for evaluation
Does the company have various marketing and product policy alternatives for choosing marketing instruments? Product version and packaging design are optimal? Market research should evaluate these options and consequently support the company in making the best decision.
4. Control and confirmation function of market research
The area of responsibility for market research does not end. After all, it is vital to improve and optimize measures constantly.
Therefore, market research also examines the success or failure of implemented business decisions and their causes.
The goals of marketing research can be derived directly:
- Point out trends and market developments to adapt as early as possible.
- Provide up-to-date, objective, accurate, and relevant information on which those responsible can base their decisions.
- Minimize the risk of strategic mistakes by providing helpful information.
Forms of market research
- Primary market research
- Secondary market research
Primary market research
Primary research is the systematic collection of previously uncollected data on a specific market segment and the associated target group:
For example, test groups or surveys (online and offline) determine what challenges the target group is currently facing and how well-known a particular brand is to this target group.
The information obtained then helps segment the relevant market and develop buyer customers. A distinction between two research approaches:
- Exploratory studies
- Descriptive studies
Exploratory studies
Here, the focus is not yet on collecting factual information on current trends in the purchasing behavior of a specific target group. Instead, it is first examined in general whether and where there is a need for action. Carry out open surveys or surveys with small groups of people.
Descriptive studies
If the initial research has shown a need for action, the identified problems – or potentials – are now examined more closely. A specific selection of potential customers should be answered about the problem in detail.
Secondary market research
Secondary research uses the interpretation of collected data. Data sources include trend analyses, market statistics, industry reports, and in-house sales statistics.
For example, this research method is ideal for determining a company’s competitors. Various categories of data sources are available for this research, such as:
- State Institutions
- Research institutes
- In-house sources
Dermoscopic market research
In addition to the data source, its reference point can also be different. Subject-related data is collected in demoscopic market research – i.e., data related to consumers or market participants. Demographic factors are mainly recorded, including:
- Age
- Sex
- Training
- Residence
- Apartment or household size
This data is related to market behavior. In this way, demoscopic market research can provide the buyer with information evaluating products and services and how they will likely structure their future spending.
The opposite of demoscopic market research is ecoscopic market research. It is not subject-related but factual and deals with objective market sizes instead of buyer attributes. Typically, key sales, price, and volume figures are here.
Quantitative market research
Quantitative market research uses methods that provide quantitative and statistical results. In addition to experiments, questionnaires with closed questions are particularly popular.
These could be, for example, “Do you like the package design?” or “On a scale of 1 to 10, how likely are you to buy this product?”
Quantitative market research mainly works with large, representative samples that allow conclusions about the general population. The procedure is strictly standardized and usually aims to test specific hypotheses that can be verified or falsified. As a result, number-based statements conclusively, for example, on frequency or probabilities.
Qualitative market research
In qualitative market research, the procedure is different. Here(instead of large samples), the focus is more on small focus groups and individual expert and in-depth interviews. For example, market researchers examine fewer test persons, but they are much more comprehensive.
The methods are also not limited to standardized formats. Instead, the test persons are allowed to express themselves in detail on a rather broad question and to give their impulses.
While quantitative market research randomly selects the respondents to avoid systematic distortions and be as representative as possible, the selection follows a particular scheme in the qualitative approach (e.g., in the conjoint analysis).
Through this approach, qualitative market research wants to gain insights in order to be able to develop hypotheses and theories in the first place (exploratory approach). These are then later often checked using quantitative methods.
