Why is market research needed?

To market effectively, businesses need information – information about customer wants, market demand, competition, distribution channels and so on; this information needs to be updated regularly, because businesses operate in a dynamic environment. This study note tells you the purpose of market research.

Why do businesses need accurate and up-to-date information

Changes in technology – enabling new products and new production processes (e.g. the growth of digital study products like this toolkit which are reducing demand for printed textbooks)

Changes in consumer tastes – meaning that the demand for some products will decline, whilst others will grow more popular (e.g. increased demand for activity-related holidays at the expense of mass-market beach holidays)

Changes in the product ranges of competitors – the introduction of new rival products, or changes in pricing policies can greatly influence the demand for a product (e.g. the introduction of the Microsoft X-Box – which has challenged Sony’s PlayStation 2)

Changes in economic conditions – an improvement or worsening of the economic climate will have an impact on incomes on a national or regional level. Different products may be affected differently e.g. luxuries v necessities etc

What is the purposes of marketing research

Marketing research can help a business do one or more of the following:

Gain a more detailed understanding of consumers’ needs – marketing research can help firms to discover consumers’ opinions on a huge range of issues, e.g., views on products’ prices, packaging, recent advertising campaigns

Reduce the risk of product/business failure – there is no guarantee that any new idea will be a commercial success, but accurate and up-to-date information on the market can help a business make informed decisions, hopefully leading to products that consumers want in sufficient numbers to achieve commercial success.

Forecast future trends – marketing research can not only provide information regarding the current state of the market but it can also be used to anticipate future customer needs. Firms can then make the necessary adjustments to their product portfolios and levels of output in order to remain successful.