Market Research: A Comprehensive Guide

Posted on May 12, 2024 in Economy

Market Studies

A) The Need and Usefulness of Market Research

Knowing the market you are entering is crucial. Market research helps to:

Define products and services according to the needs, tastes, and preferences of consumers.
Determine market size and estimate sales.
Demonstrate the feasibility of the project and decide on market placement.

B) Concept and Purpose

Market research involves both qualitative and quantitative analysis:

Qualitative Analysis: Understand the characteristics of potential customers, their needs, the existence of distinct segments, tastes, and preferences.
Quantitative Analysis: Determine market size, potential demand, and its evolution.

Further quantitative analysis includes:

Product/Service Analysis: Knowing the products on the market and their characteristics, and the possibility of new products/services.
Communication Analysis: Understanding advertising media, sales promotion, its effectiveness, and public relations.
Distribution and Sales Analysis: Knowing the distribution channels and networks, business needs, and applicable sales strategies.
Sector and Competition Analysis: Understanding the situation and developments, characteristics of competitors, strengths and weaknesses, bargaining power with customers, threats from new competitors, and entry and exit barriers.

Sources of Information

Internal Sources

Accounting and internal information systems serve as a guide for entrepreneurs. Analyzing sales orders can reveal insights into product acceptance and pricing.

External Sources

External sources are the most important for market research. They can be:

Primary: Obtained directly from the market (clients, suppliers).
Secondary: Produced publications, studies, reports, records, statistics that are already available.

A) Primary Sources: Methods of Obtaining Information

Surveys: Personal, telephone, mail, internet.
Panels: A representative group of people from the target audience whose behavior is analyzed periodically.
Observation: Direct observation or through cameras or other electronic means.
Experimentation: Reproducing market conditions through simulated tests in a determined geographical area to analyze the behavior of the target group.

B) Secondary Sources

Publications, studies, reports, records, statistics, databases from sources such as:

Government bodies (local, regional, and central).
Associations (business, sectoral, and professional).
Private companies and foundations.
Universities, academic institutions, or research centers.

Stages of Market Research

Approach

What do you want to know?
Why is the study being carried out? (Objectives)
How will the study be performed? (Sources of information, techniques, costs, implementation time)

Execution

Carrying out all planned activities to obtain information from secondary or primary sources (sample selection, questionnaire preparation, surveys, interviews).

Data Tabulation and Analysis

Sorting, tabulating, and quantifying information using statistical procedures (mean, median, mode) and graphics.

Interpretation of Results and Conclusions

Drawing meaningful conclusions from the analyzed data.

Consumer Behavior and Market Segmentation

A) Fundamentals in the Study of Consumers

Understanding the consumer is key:

Who are they? (Age, sex, social status, profession)
Who actually buys? (Who is the consumer, who decides the purchase, who pays, who influences their opinion?)
What is purchased? (Features of the product/service)
Why is it purchased? (Reasons for purchase)
When is the purchase made? (Dates and frequency)
Where is the purchase made? (Type of establishment, distribution channels)
What quantities are purchased?

B) Purchase Decision Process

Emergence of Need: The consumer recognizes a need or desire.
Information Search: The consumer seeks information to buy the best product, at the cheapest price, and with minimal effort.
Evaluation of Alternatives: The consumer compares various options and evaluates the characteristics and value of your product/service.
Purchase Decision and Implementation: Factors like payment facilities, attractive points of sale, and qualified vendors influence the final decision.
Post-Purchase Behavior: Understanding the degree of consumer satisfaction is crucial. A satisfied customer will repeat purchases and become an effective advocate for your product/service.

C) Market Segmentation

Dividing the total market for a product/service into smaller groups formed by consumers with more homogeneous demand criteria.

Segmentation Factors:

Geographic: Nationality, country, city or town of residence.
Demographic: Age, sex, household composition.
Socioeconomic: Income level, social class, educational level, profession, religion.
Personal: Personality, disposition, lifestyle.
Performance Against the Product/Service Acquired: Consumption habits, brand loyalty, quantity demanded.

D) Market Segment

A consumer group that exhibits similar purchasing behavior for a product/service.

Companies must select which market segments they will target with their product/service. This is called the target market. An accurate choice of target market enables the company to better understand their customers and tailor product and communication strategies to their tastes and preferences.

E) Company Strategies for Market Action

Undifferentiated Strategy: When consumers respond similarly and do not show sufficient differences to justify differential marketing by segments. The market is considered as a whole and segmentation is not necessary.
Differentiated Strategy: When one or more segments are selected and the company decides to employ different marketing strategies for each segment.
Concentrated Strategy: When the company focuses on only one segment. This is best for businesses with scarce resources, allowing them to focus their marketing efforts on a smaller population group.

The Questionnaire

A questionnaire consists of all questions and answers organized, sequenced, and structured to provide the necessary information. Questions should be clear, brief, and unambiguous.

Types of Questions:

Open
Closed
Semi-open
On drums
Evaluation
Introductory or motivating

Preliminary Tests: Tabulating and quantifying questionnaire responses to draw conclusions.

Conducting the Survey

Sample Selection

The sample must be representative so that the results can be extrapolated to the entire market.

Random Sampling Methods:

Simple Random Sampling: Randomization using methods like balls or slips, suitable for small populations.
Systematic Sampling: For large populations where elements are listed, the sample is selected at intervals (e.g., 1 out of 100).
Stratified Sampling: The population is divided into groups or strata, and a sample is chosen from each stratum. This is the most commonly used method.

Non-Random Methods:

Quota Sampling: Segments are set by age, sex, profession, income, etc., and a number of individuals or contributions from each segment are fixed for the survey.
Random Route Sampling: A certain number of routes are randomized in a zone or city, and surveys are conducted on each route. Respondents are chosen according to the same norms for every pollster available.

Sample Size

The sampling error is committed by using a sample instead of the whole population. The larger the sample size, the smaller the error.

Implementation Plan

Determine how, to whom, and when the survey will be conducted. Forms of survey administration include personal, mail, telephone, and internet. Justify the chosen method and the total number of respondents. Decide and justify the most appropriate time and place to conduct the survey.

Analysis and Interpretation of Results

Revision and Control of Questionnaires and Responses

Eliminate inconsistent responses, unanswered questions, and responses from unqualified reviewers.

Data Tabulation

Count responses and frequencies in a table, indicating the number of times the same answers are repeated.

Types of Variables:

Continuous: Can take any intermediate value between two consecutive units (height, weight, income).
Discrete: Can only have specific values (number of children, cars).

Plotting

Provides a quick visual representation of the magnitude of frequencies.

Discrete Variables: Bar charts, rectangles, columns, newsletters, rings, and pie charts are often used, where the magnitude of the frequency is given by the height of the bar.

Continuous Variables: Intervals are usually grouped into histograms or frequency polygons, where the magnitude of the frequencies is given by the surface or volume of the figure.

Calculation of Statistics

Summarize table information using statistical formulas to provide an idea of position, dispersion, and dependence between variables.

Measures of Position:

Median: The value that divides the total frequency in half.
Mode: The value that is repeated most often.
Arithmetic Mean: Gives an idea of the average value of the variable. Can be simple (if frequency or weight is not taken into account) or weighted.

Measures of Dispersion: Variance, standard deviation, and mean values indicate whether values are clustered around the mean or isolated.

Regression and Correlation Measures: Provide an idea of the dependence between the variables studied.

Presentation of Results and Conclusions

Present the findings and conclusions of the study in a clear and concise manner.