Market research is a process of collecting information using various sources with the aim of finding out people’s opinions and attitudes concerning given goods and services.
The results help producers to project their sales, change and modify goods and services to meet consumers’ needs. It is a valuable source of information for future policies of the business.
Importance of market research
- Manufacturers carry out market research with the aim of;
- Finding out the tastes and preferences of consumers in order to adjust the production of goods to meet consumers needs.
- To find out the potential market with effective demand. This usually influenced by the level of income of the consumers
- To know how much of the goods are needed on the market
- To establish the best advertising media for their products which will reflect the best price obtainable on the market.
- To establish the out best distribution channels for their products
- To find out the number of people who prefer a certain type of packing, colour etc
Methods used in collecting market research
- Internal research by reviewing literature
In this method, one studies various figures from past accounting and historical records of a firm.
It helps to compare the sales from one period to another; alternatively, sales of one department are compared with those of another.z
This method will portray a clear picture in the trend of the market.
- By observing
This is a research method where the manufacturers simply watch and make conclusions without asking questions.
Areas of observation include; people’s choices, demands, sources of supply, price, consumers complaints, the effectiveness of labels and packing materials etc. the outcome of the observation can help manufactures to design a new approach for successful marketing.
- The pilot scheme by experimentation
Under this method, questioners results of the pilot scheme can be used to determine modifications, projection, policies that will be designed both for international and national distribution of goods.
This occurs/ is relevant when products are produced on a small shade and a representation area is chosen where samples are taken to be sold. It is referred to as Area Retail Testing.
- Consumers surveys
The aim of this method is to get consumers opinions about a product directly from them. It is done by sampling methods that may takes the form of random sampling, quota sampling, stratified, cluster sampling.
Carefully selected trained research assistants are sent out where consumers are given elected questionnaires. They interview consumers directly or given them the questions.
The questions will help the manufacturers arrive at the required conclusion to design policy. Consumer surveys can also be done by telephone or post office services.
Problems faced in market research
- The lack and poor storage of records makes it difficult to compare records which were used to assess data overtime.
- Market research may be very expensive especially with the methods used (area retail testing) and this may lead manufacturers into losses
- Wrong conclusions may be drawn about a particular good due to the unfaithful retailers who fill wrong information in questionnaire.
- It also involves a lot of care when drafting a questionnaire
- The poorly trained and untrustworthy interviews may give wrong information about a good.
- The problem of the language barrier makes it difficult for every retailer to fill in the questionnaire.
- Due to the expenses involved in carrying out research for example in the consumer surveys, the final price of the good may be higher.
- A poor communication system for example lack of post office boxes, lack of telephone facilities etc makes posting questionnaires ineffective
- It is difficult to obtain information from consumers using consumer surveys since most consumers are scattered.
- The problem of poor co-operation from the public since people will not reveal information about their true tastes and preferences and others would not want to talk to strangers.
- When using consumer surveys, and the pilot scheme, the representative areas chosen may be a poor representative of the national market eg people in that area may not have taste and preference for that good yet sample products may be preferred in another area.