What is Market Research

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Zeroing in on Customer Preferences with Targeted Questions

Do you purchase athletic wear? How far would you travel for delicious gluten-free pizza? These are the kinds of questions you might be asked if you participate in market research. Such surveys help businesses meet their customers’ needs and ultimately help you choose the best products and services for your family.

What Is Market Research?

Market research is the process of collecting, analyzing and interpreting data about a product or service; about past, current and potential customers; the demographics of the target market; competitors; or an industry as a whole. Companies use market research to determine whether changes are desired in an existing product, or if there is sufficient customer demand to launch a new one. Believe it or not, Hollywood filmmakers sometimes change the ending of a film if test audiences have a very negative reaction.

Why Is Market Research Important?

Say you’ve always dreamed of opening a bakery. Your delicious cupcakes always sell out at bake sales. Friends and family rave about your chewy chocolate chip cookies. Market research can help you make decisions about your business before you invest your time and money.

You will want to know if other specialty bakeries are in the area. Find out if people are willing to pay more for gourmet items. Will potential customers be willing to make an extra trip for baked goods, or, are they more likely to buy from the bakery department at the supermarket because it’s more convenient? Can you depend on special orders, or will you rely on foot traffic?

Determining the answers to these questions can open the door to a new opportunity while saving you from making costly mistakes.

Market Research Analysis

Analysis is based on two types of data. Primary information is research you gather yourself or that you’ve hired someone to gather for you. Secondary information is research that has already been gathered and organized by another entity, such as a trade organization or government agency. The U.S. Census Bureau is one of the best-known collectors of information on individuals, families and industries.

How to Conduct Market Research

Whether you’re conducting market research for your own business or on behalf of someone else, there are a number of techniques you can employ:

  • Direct Mail Questionnaire: This should be short and sweet, so respondents don’t lose interest. Two pages is the max. Provide a postage-paid return envelope and offer an incentive for completing the questionnaire, such as 10 percent off the next purchase. Typically, responses are low, from 3 to 5 percent.
  • Phone Survey: You can probably complete five to six phone surveys per hour, making this a quick, cost-effective method of gathering data. Confirm the name of the respondent as you begin the call. Memorize your script rather than read it, and try to sound as natural as possible. Keep the survey under 10 minutes.
  • Group Survey: Typically used by large companies, group interviews or focus groups are designed to elicit ideas for new products and get information on the buying habits of a certain group of people.
  • In-Depth Interview: Direct questions are developed ahead of time. In some cases, interviewers will ask minimal questions to allow the interviewee to address topics.

Have you ever noticed people with clipboards engaging shoppers at the mall? Large market research companies often maintain offices in malls for ready access to potential survey participants. The market research firms are employed by political candidates, community action groups, service providers and manufacturers. Sometimes, you will be asked a few questions on the spot. You may be invited to participate in more extensive market research. You might preview some commercials, sample a new snack item or take part in a group discussion about a candidate’s political agenda.

If you are looking to make a little extra cash or score free products or discounts, take time to participate in market research. Answering a few quick questions can get you coupons or product samples. Participation in a focus group can earn you anywhere from $45 to $250. Online surveys don’t pay as well, but they’re easy to do from the comfort of home, perhaps after your kids are in bed. Earn points that are redeemable for gift cards with retailers such as Amazon and Starbucks. Check the GreenBook Directory for survey opportunities.