Topic 2.3 · Market Research
Market Research
Why businesses research markets, secondary vs. primary research, choosing methods to test hypotheses, avoiding skewed data, and choosing the right chart.
Learning objectives
- 2.3.AExplain why businesses conduct market research.
- 2.3.BConduct and interpret secondary-source research to assess a market opportunity.
- 2.3.CConduct and interpret primary-source research to test a business hypothesis related to target customers and/or customer preferences.
- 2.3.DDevelop and interpret data visualizations that reflect market research findings.
Objective statements © College Board, quoted from the Course and Exam Description.
Market research is the process of collecting detailed information about markets, products and customer behavior to guide decisions. Researchers gather two kinds of data:
| Quantitative | Qualitative |
|---|---|
| Numbers: how many, how much, how often | Words and images: why and how |
| “62% of respondents would pay $8 or more” | “I'd buy it if it didn't leak in my backpack” |
Why businesses do research
For a new product, research tests three things before significant money is committed:
| Lens | Question | Example evidence |
|---|---|---|
| Desirable | Does it create value for customers (problem-solution fit)? | Interviewees describe the problem unprompted |
| Feasible | Can we make and deliver it with our resources, technology, expertise and time? | Supplier quotes, prototype tests |
| Viable | Can it be sustainably profitable? | Price customers will pay vs. per-unit cost |
For existing products, research tracks changing needs, uncovers innovation opportunities, and informs strategies to keep or grow market share.
Key terms
- Market research
- Collecting detailed information about markets, products and customer behavior to guide marketing decisions.
- Quantitative data
- Numerical data that answers how many, how much or how often.
- Qualitative data
- Descriptive, non-numerical data (words, images) that answers why and how.
- Desirability
- Whether a product creates value for customers by achieving problem-solution fit.
- Feasibility
- Whether a business can produce and provide a product with its available resources, technology, expertise and time.
- Viability
- Whether a product can be sustainably profitable for the business.
- Secondary-source research
- Using information others have already published (government, commercial and academic sources). Usually cheaper.
- Primary-source research
- Collecting new data directly through surveys, interviews, focus groups, experiments, observations or A/B tests.
- A/B testing
- An experiment that measures real customer responses to two viable alternatives.
- Skewed data
- Results distorted by a sample that is too small or unrepresentative, or by biased questions.
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