Market Research and Its Strategic Role in Marketing Decision-Making
Market research, also known as marketing research, in the broadest sense refers to the application of various research techniques that are intended to support key marketing decisions. According to the European Society for Opinion and Marketing Research (“ESOMAR”), marketing research is defined as such:
Marketing research is a key element within the total field of marketing information. It links the consumer, customer and public to the marketer through information which is used to identify and define marketing opportunities and problems; to generate, refine, and evaluate marketing actions; and to improve understanding of marketing as a process and of the ways in which specific marketing activities can be made more effective.
There are several aspects of this definition that is noteworthy to our understanding of market research. Firstly, the importance of basing marketing decisions upon a strong understanding of target groups and their behaviours is emphasized. Secondly, market research is the element which enables such marketing decisions to be made, by serving as an information link between marketers and target groups. In addition:
Marketing research specifies the information required to address these issues [of linking the consumer, customer, and public to the marketer]; designs the method for collecting information; manages and implements the data collection process; analyses the results; and communicates the findings and their implications.
ESOMAR’s further qualification of its definition also illuminates the importance of due process in market research, which is key to delivering information in an accurate and impartial manner.
The Market Research Process
As observed above, market research aims to be objective, and this characteristic is crucial within the business setting because sound decision-making should be made based on objectivity and rationality with minimal personal or political biases. By adhering to a standard of objectivity, business performances can be systematically evaluated and improved through better and more effective marketing practices.
Market research projects are highly customizable to solve the marketing problem at hand, both in terms of its research approach and design. Nevertheless, despite its flexibility at the implementation level, an effective market research project typically adheres to a set of best practices in terms of its overarching procedural (or research) framework. Figure 1 illustrates this framework, which is constructed linearly through 5 stages.
- Stage 1: Problem Definition. The first step to any market research is to clearly define the marketing problem at hand and the related marketing decision (or objective) that the company wishes to achieve. This is usually determined internally, within marketing departments or with the involvement of senior management. However, marketing problems range in degrees of difficulty, and for more complex marketing problems identification should be conducted through a formal fact-finding research process in order to avoid oversight. Once the marketing problem and the decision that is being sought are established, these are translated into one or several market research problems (or statements) to be investigated.
- Stage 2: Approach and Design. Based on the market research problems, the research approach is determined, which means to “identify the solution that solve the problems”. The research approach may be underpinned by established theoretical frameworks, or customized frameworks if the problems are unique. After the research approach has been determined, the process proceeds to research design. Research design refers to the process of identifying what data and information are needed, where the data sources are located, and how to obtain them. During research design, instruments for data collection may be created for implementation in the next stage.
- Stage 3: Fieldwork and Data Collection. This stage consists of four further sub-stages, of which its length is dependent on the research design. The four sub-stages are (1) secondary research; (2) identification of primary research targets; (3) qualitative/quantitative research; followed by (4) quantitative/qualitative research. More complex market research problems may require all four stages of fieldwork to provide sufficient evidence for subsequent analysis, whereas less complex market research problems may require only one. Complex market research problems may also require qualitative and quantitative researches to be run in parallel in order to investigate different characteristics of the problem simultaneously.
- Stage 4: Data Preparation, Analysis, and Insights Generation. Once fieldwork has ended and data collection has completed, data preparation takes places and involves the process of cleaning, editing, coding, transcription, and verification of the data. This process applies to both quantitative and qualitative data. Once data preparation is complete, data analysis tools can be applied on the data sets to discover correlations and patterns of relationships, thus turning data into meaningful insights. Internalization of insights, that is synthesizing insights with the researcher’s knowledge, experience, and understanding of the problem at hand, transforms insights into knowledge for the company.
- Stage 5: Presentation and Strategic Planning. At this stage, the market research is complete. The findings are presented to the head of marketing, and may be to the members of senior members as well. In traditional market research projects, the job ends once the findings have been assessed and delivered. However, recent developments in the field has increasingly extended the research to include components of strategy. This is exciting and represents a natural progression into data-driven marketing decision-making.
Market Research and the Marketing Ecosystem
As observed in the sections above, market research serves as the information linkage between marketing functions and their target groups, in a marketing ecosystem where value is exchanged. This is illustrated in Figure 2. What is noteworthy is the complexity of the environment in which the marketing ecosystem exists. Macro-environment factors coupled with meso-environment factors govern the relationships between marketing functions and target groups, whereas the tools and values in which value is exchanged is constantly adapting to these environment changes over time.
The time factor has significantly altered the role of market research within the marketing ecosystem. While the basic premise of market research in business settings is to understand customer needs, such that marketing strategies, plans, and decisions aimed at satisfying those needs can be implemented in an informed manner, the time factor and the rate at which environments are changing have increased the need for more accurate and timely information in recent years. As firms become national and increasingly international in their market reach, the need for information on more distant and dissimilar markets has increased; as consumers become more affluent, discerning and sophisticated, marketing functions need better information on how to deliver innovative products and other marketing offerings to them; and as competition become more intense, companies need information on the effectiveness of their marketing tools. Given these circumstances, market research should certainly be considered as a pillar component to any strategic marketing plan.