What is market research: definition and meaning
“Market research” includes activities for the systematic collection of data on the development of markets.
On the one hand, this involves the qualitative and/or quantitative development of demand with an outlook into the foreseeable future. Especially when investments are to be made, a reliable statement about the future market and demand development is important.
What are the objectives of market research?
Market research is intended to gather targeted information in order to support decision-making processes in product management, product development and marketing and sales with facts.
The statement about the future of markets and needs must not be derived from the past alone. The future is not necessarily a continuation of the past. This is because the economy develops dynamically with the activities of entrepreneurs. Current successes with a strategy that has worked so far may no longer be possible in the future because framework conditions can change.
Therefore, in addition to past market developments, current goings-on must be observed and probable future activities must be assessed. This requires a broad and future-oriented field of vision.
Managing the game by watching the scoreboard must give way to strategically managing the game itself.
Market research methods: The right tools
Market analysis versus market observation
Market research can take the form of a market analysis or an ongoing market observation. A market analysis is a time-related collection of market-relevant data, while a market observation is designed as a permanent process.
Qualitative versus quantitative market research
A distinction is made between qualitative and quantitative market research. Qualitative market research provides information about the fundamental development of markets without quantifying changes exactly. Quantitative market research aims to quantify changes in markets in concrete terms.
Primary versus secondary market research
Primary market research collects data through observation and/or surveys directly in the relevant markets (field research), while secondary market research evaluates information that has already been collected (desk research).
Primary market research can be carried out with the aim of obtaining a picture of the mood; it can also have a representative result as its goal. For the latter, a reliable statistical methodology must be applied.
Offline versus online market research
Market research needs a communication channel into the markets that are to be covered. If access to these markets takes place through personal or written contact, we speak of offline market research; if access is chosen via the internet, we speak of online market research.
Examples of market research
Sound market research is recommended before making specific investments.
Example: A manufacturer of high-precision steel machine components sees an opportunity in concentrating on supplying the wind power industry. The significant investment in machinery necessary for this requires the certainty of a sufficient volume of orders. The order volume in turn depends on political decisions on the use of wind power for energy generation. A solid analysis of this complex situation and the perspective beyond the immediate market conditions is therefore essential.
Market research” also means observing how customers and their customers usually deal with products. That is by no means a matter of course. What features do your customers perceive as benefits?
Example 1: In an internationally active group of companies whose operational sites manufacture products in plastic injection moulding, product development was concentrated in the UK. An injection mould for the production of plastic baguette baskets was developed and built. When the first baguette baskets were introduced to French retailers, disillusionment set in. Baguettes are sold standing up in France; however, the baguette baskets were designed to have the baguettes lying down in them. A market peculiarity was not taken into account. As a result, the injection moulds had to be rebuilt. 100 TEUR had been sunk because no one dealt with the application.
Example 2: In an internationally active group of companies whose operational sites manufacture products in plastic injection moulding, product development was concentrated in the UK. Injection moulds were produced for foldable plastic boxes for fruit and vegetable transport. The injected and assembled boxes worked very well until they were tested by warehouse staff at a wholesale site. The erected and filled boxes were pushed onto the stacks from the short side by the female employees. In the process, the side wall buckled inwards because it did not bump against the long sides, but the long sides against the short sides. The developers had not looked at the sequence of events that had taken place. The boxes could not be used. The tools had to be newly developed and built. A loss in the 6-digit euro range had to be absorbed. In addition, the manufacturer was behind schedule.
Example 3: After a long development period, the product development department of a manufacturer of fingerprint sensors for use by the police and customs presented a prototype that was neither approvable nor of a reasonable size. The development had completely bypassed the requirements of the target customers because there was no customer dialogue.