Market Research Tutorial: Purpose of Market Research
The purpose of market research, according to the market research tutorial, might appear to be painfully obvious: a business has a decision to make and has questions about customers and/or its competition that need to be answered to make a better decision.
True to a point. The purpose of market research is indeed to provide answers to marketing questions and to provide a more complete, rich picture of customer needs and wants (and potential customers too) and to learn how a business is doing comparedto competition.
A major caution applies.
First, market research provides input to and illumination of the issues a business or organization faces. It is not, however, THE answer. Rather, it is only part of the answer. Let's say a local bank is considering opening a new branch. Management wants to know if there will be enough customer demand to justify the expense. Management also has a list of other considerations. What hours are optimal to be open? Why type of customers are likely to use the branch? What services might these customers demand?
Market research can quickly, easily and cost-effectively answer these questions from a customer/potential customer perspective. And let's say that the market research results come back positive. Are the research results the deciding point on whether to open the new branch or not? Congratulations! Ten points if you said NO! Management must consider many other factors as part of the ecision: what investment must be made to open and maintain the branch? How is the local economy doing and what is likely to happen to it in the near term? You get the point.
Often, market research warns management about a potentially costly mistake. Consequently in some circles, it is viewed as joy-killer. A retailer went forward with a second location--found a perfect building (so they thought), with easy access and plenty of traffic. The company renovated and set up an inviting space, ready for lots of new business. Much to their chagrin, nobody came. Management was puzzled. What was wrong? Finally, they commissioned market research to learn what the issues were. The answers came back clear and profoundly disappointing. Turns out that the location they had selected had formerly housed a business that was widely perceived as having ripped off the local population, who simply refused to associate with anyone in that location, fearing a duplication of the rip-off experience.
Obviously, if the market research had been done prior to the investment in the new location, management would have been spared considerable angst, not to mention the wasted investment.
So, in conclusion, the purpose of market research is to uncover information that may provide insights to help in business decision-making. This theme will arise again and again as this guide progresses.
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