Good morning class! Today, we are going to talk about the purposes of market research. Market research is essentially the process of collecting, analysing, and interpreting information about a market. This includes data about customers, competitors, and the overall industry trends. It’s a vital tool for businesses because it helps them make informed decisions about products, prices, promotion, and where to sell. Think of it as a roadmap that reduces risk and guides businesses to success.
Market research mainly has two purposes: understanding the main features of a market and understanding customers—their characteristics, profiles, wants, and needs.
Let’s start with identifying the main features of a market.
First, there’s market size. This refers to the total sales volume or value in an industry. Knowing the size helps a business decide whether it’s worth entering that market. For example, before launching a new mobile phone in Southeast Asia, Samsung would research the smartphone market size to estimate potential demand.
Next is market growth, which shows how fast a market is expanding or shrinking. Rapidly growing markets are usually more attractive for new businesses. Think about the electric vehicle market—Tesla and BYD are investing heavily because the EV market is growing fast.
Then we have market share. This is the percentage of total sales a business has in a market. It tells companies how well they are performing compared to competitors. Apple, for example, keeps track of its smartphone market share to assess its position against rivals.
Finally, competitor analysis is key. Market research identifies main competitors, their strengths, weaknesses, and strategies. This helps a business find gaps in the market. A new coffee shop might research local cafés’ pricing, menus, and service to see where they could offer something unique.
The second major purpose is understanding customers and consumers. Knowing your customers is central to successful marketing.
First, businesses look at customer and consumer characteristics, such as age, gender, income, occupation, and location. This helps segment the market and target the right people. A cosmetics company, for instance, may target different products for teenagers versus older adults.
Next, we have customer profiles. These are detailed descriptions of a typical customer, including buying habits, brand preferences, motivations, and media usage. Nike, for example, creates profiles for athletes, casual sportswear users, and fashion-conscious teens to market products effectively to each group.
Finally, understanding customer wants and needs is crucial. Needs are basic essentials, like food or safety, while wants are shaped by culture and personality. For example, Ryanair focuses on the need for cheap travel, whereas Emirates caters to the desire for luxury and comfort.
In conclusion, market research helps businesses understand the market and their customers. This allows them to make smarter decisions, target the right audience, and increase their chances of success. Without it, businesses risk launching products no one wants or misjudging their competition, which can be very costly.
