Page 2: What is market research?
The exchange between sellers (supply) and buyers (demand) for particular goods or services is called a market. A market does not necessarily exist in a single location, nor need it be a real location – products can be bought and sold online.
Markets change constantly and businesses need to have a clear understanding of both the supply and demand. The principal role of market research, therefore, is to provide a business with a comprehensive view of consumers in order to develop products and services that satisfy their needs better than the competition. Also, given the increased complexity of the business environment, it is no longer enough to make key decisions using a ‘gut-feel’ approach alone. Decisions need to be informed and market research helps to support this process, significantly reducing the level of financial risk attached with investment decisions.
Market research involves the capture and analysis of consumer, competitor and market trend data. This enables JD to assess more accurately the level of demand for its products. It also influences decisions to target capital investment on projects that will offer the best return on that investment, such as opening a new store or entering a new market.
Market research provides consumer feedback. It is essential for JD to have this dialogue with the consumer to gain insight into what they think about its range of products, brands and services. This enables the business to meet its demands and outperform the competition. It helps the business develop a clear and informed strategic business plan which all business colleagues can work towards fulfilling. For example, this information can create a winning marketing mix to target promotions to reach different customer groups or influence decisions on range planning in new stores.
Research can also provide information about the size and performance of markets. It can inform a business about who the key competitors are, what they are doing, and their market share. Potential areas of opportunity within an international, national and local context can also be identified. By using tools such as an Ansoff’s matrix to assess the levels of risk, JD can then decide which marketing strategies to focus on.
- market penetration – winning greater market share in its existing markets
- market development – entering new countries or new retail sectors
- product development – acquiring or developing new products or brands
- diversification – taking the business in a completely new direction.