We explain what a market study is, what this review is for and the types that there are. Also, the steps you use and examples.
What is market research?
A market study is a review made by companies in a niche market, to determine how viable it is and how convenient, therefore, it would be to invest your money in developing it.
In short, it is a preliminary exploration that companies make to determine whether or not a given economic activity is profitable or sustainable enough over time to be convenient for them.
This type of studies involves both the productive sector and the service sector, and provides companies with as much information as possible about the consumption patterns of a given niche in a given geographic and social location. Market studies are not universal but particular and have a specific validity.
That is why market studies usually done twice a year (semi-annually), to monitor how current markets move and what possible markets are born, so that you can foresee future opportunities and risks and get a better profit from your assets.
In this sense, these analyzes they are usually interdisciplinary, involving specialists in applied economics, philosophy, statistics, communication, administration and management, among other specific areas.
What is a market study for?
These types of reviews have the task of inform companies as much as possible about the behavior of their markets of interest, that is, of its eventual or current consumers, to help them define their business strategy.
If a market study shows high profit and growth scenarios in a novel area, the company can invest money in that market niche; if instead it returns dangerous data, the company will act more cautiously. Market studies are key in decision making.
Types of market research
There are three basic types of market research:
- Exploratory. Collect initial information on a specific market situation, based on secondary sources such as magazines, publications, or interviews with experts.
- Descriptive. It undertakes market segmentation through processes of identification and quantification of consumption, that is, it makes a reading of the current state of the matter and expresses it in economic and business indicators.
- Casual. It seeks to establish causal relationships, that is, of cause and effect, in the phenomena observed in a market. Above all, it explores the relationships between the sale and its possible objective causes.
Steps of a market study
In very broad strokes, the steps to carry out a market study would have to involve the following:
- Collect information. This implies going to different sources (digital, written, face-to-face) both in public and specialized media, always starting from the information that the company already has on the subject.
- Observe the demand. This means measuring what is happening in the market, to get an idea of the state of matter. Surveys, visits to the competition and real contact with customers is key at this stage.
- Analysis of the offer. Once you understand the behavior of the market, or its main trends, it is convenient to take a look at the competition to see what they do well and what they do wrong, where they are right and where they are wrong and what their weaknesses are.
- Define the objective. Based on all of the above, the objective of the study can be established and the information broken down based on the possible conclusions that can be obtained from it. That is to say: process the information taking into account what it is that we are asked to understand, in order to move towards specific conclusions.
- Preparation of a final report. Finally, the entire process will be presented, emphasizing the analyzes and conclusions, to the client. This report may include a SWOT analysis or the four “Ps”, or any other convenient method.
Market study example
A quick example of a market study can be, in the case of a toy store:
- Review the documentation on toy stores, the toy sector and the children’s public, both in specialized books and in reports and other informative material.
- Attend the toy store and conduct opinion surveys, surveys and a study of the number of buyers vs. number of visitors, to know how many customers who enter the store actually buy, and why.
- Repeat a similar study in two nearby competing toy stores, if possible. Check your promotional strategies with those of the toy store analyzed, detailing, for example, promotional days, sales seasons, etc.
- Process the information collected to reach meaningful conclusions. For example: your competition attracts twice as many customers to your store, which is brighter and has a window up to date with the characters of the moment. However, it sells a similar figure to what the others sell.
- Offer conclusions based on the analysis: the advantage of the competition is the appearance, but it does not sell more due to its high prices. An investment in decoration could attract much more public and be paid not with price increases but with sales volume.