We explain what a market study is, what this review is for and the types there are. In addition, the steps used and examples.
What is a market study?
A market study is a review by companies of a niche market , to determine how viable it is and how convenient, therefore, it would be to invest their money in developing it.
In a nutshell, it is a previous exploration that companies do to determine if a given economic activity is profitable or sustainable enough over time to be convenient.
This type of study involves both the productive sector and the service sector , and provides companies with all possible information about the consumption patterns of a particular niche in a given geographic and social location. Market studies are not universal but private and have a certain validity.
That is why market studies are usually done twice a year (semiannually), to monitor how current markets move and what possible markets are born, so as to be able to foresee opportunities and, also, future risks and make better use of their assets .
In this sense, these analyzes 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 informing companies as much as possible about the behavior of their markets of interest , that is, of their eventual or current consumers , to help them define their business strategy .
If a market study throws scenarios of much profit and growth in a new area, the company can invest money in that niche market; If instead it throws 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 . It collects the initial information about 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
Broadly speaking, the steps to develop a market study would have to involve the following:
- Collect the information . This implies going to different sources (digital, written, face-to-face) in both public and specialized media, always based on the information that the company already has on the subject.
- Observe the demand. This means measuring what happens in the market, to get an idea of the state of the matter. Surveys, visits to the competition and real contact with customers is key at this stage.
- Offer analysis . Once you understand the behavior of the market, or its main trends, it is advisable to take a look at the competition to see what they do well and what they do wrong, what they are right and what they are wrong about and what their weaknesses are.
- Define the objective . From 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 we are asked to understand, to move towards concrete conclusions.
- Preparation of a final report . Finally, the whole process will be presented, emphasizing the analysis and conclusions, to the client. This report may include a SWOT analysis or the four “P”, or any other convenient method.
Market research example
A quick example of market research can be, in the case of a toy store:
- Review the documentation on toy stores, the toy sector and the children’s audience, 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 toy stores of the competition, as far as possible. Compare your promotional strategies with those of the analyzed toy store, detailing for example promotional days, offer seasons, etc.
- Process the information gathered to reach significant conclusions . For example: the competition attracts twice as many customers to its store, which is brighter and has a window a day 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 because of its high prices. An investment in scenery could attract much more public and be paid not with price increases but with sales volume.