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What is Market Research?
Market research is the systematic process of collecting, analysing, and interpreting data about a market, including customers, competitors, and industry conditions. It helps businesses make informed decisions and reduce uncertainty.
Definition
Market research is the organized effort to gather information about target markets and customers to support business strategy, product development, and marketing decisions.
Key Takeaways
- Provides insights into customer needs, preferences, and behaviour.
- Helps businesses validate ideas, identify opportunities, and minimise risks.
- Combines qualitative and quantitative research methods.
Understanding Market Research
Market research is essential for organisations looking to stay competitive and relevant. It reveals what customers want, how they buy, and what influences their decisions.
Businesses use market research when launching new products, entering new markets, assessing brand perception, or refining marketing strategies. Methods include surveys, interviews, focus groups, competitor analysis, and data analytics.
Effective market research closes the gap between assumptions and reality, ensuring that business decisions are supported by evidence rather than guesswork.
Formula (If Applicable)
There is no single formula, but market research often includes:
- TAM–SAM–SOM Analysis (Total, Serviceable, and Obtainable Market)
- Market Size = Number of Buyers × Average Purchase Value
Real-World Example
Before launching a new feature, companies like Meta or Google conduct A/B testing and user research to understand customer reactions, optimise design, and increase adoption.
Importance in Business or Economics
Market research supports better decision-making, reduces financial risks, identifies emerging trends, guides product development, and enhances customer satisfaction.
Types or Variations
- Primary Research: Surveys, interviews, direct observations.
- Secondary Research: Reports, databases, industry publications.
- Qualitative Research: Explores motivations and attitudes.
- Quantitative Research: Provides measurable data for analysis.
Related Terms
- Market Analysis
- Customer Insights
- Competitive Intelligence
Sources and Further Reading
- Statista – Market Insights: https://www.statista.com
- McKinsey – Marketing Insights: https://www.mckinsey.com/industries
- OECD Data: https://data.oecd.org
Quick Reference
- Identifies opportunities and customer needs.
- Reduces uncertainty and supports strategic decisions.
- Uses qualitative and quantitative methods.
Frequently Asked Questions (FAQs)
Why is market research important?
It ensures decisions are guided by real data rather than assumptions.
How often should market research be conducted?
Continuously—especially before major decisions or market moves.
Is market research costly?
It varies. Small businesses can use low-cost tools, while larger firms may invest in detailed research.
