Market Research for Business and Commercial Practices

This document outlines the purpose of market research, focusing on understanding demand, competition, and the target market. This is a crucial aspect of successful business planning and commercial practice.

1. Understanding Demand

Market research helps businesses understand the level of interest consumers have in a particular product or service. This understanding is vital for production planning, pricing strategies, and overall business viability.

1.1. Types of Demand Research

• Primary Research: Involves collecting new data directly from potential customers. Examples include surveys, interviews, and focus groups.
• Secondary Research: Utilizes existing data collected by others. This can include industry reports, government statistics, and competitor analysis.

1.2. Key Questions Demand Research Addresses

• What is the current demand for the product/service?
• What are the trends in demand (increasing, decreasing, stable)?
• What factors influence demand (e.g., price, seasonality, marketing)?
• What is the price sensitivity of the target market?

2. Analyzing Competition

Understanding the competitive landscape is essential for developing effective strategies to gain and maintain market share. Market research provides insights into competitors' strengths, weaknesses, and market positioning.

2.1. Identifying Competitors

This involves identifying both direct and indirect competitors. Direct competitors offer similar products/services to the same target market. Indirect competitors offer different products/services that satisfy the same customer need.

2.2. Competitive Analysis Techniques

• SWOT Analysis: Evaluating competitors' Strengths, Weaknesses, Opportunities, and Threats.
• Market Share Analysis: Determining the percentage of the total market controlled by each competitor.
• Pricing Analysis: Comparing competitors' pricing strategies.
• Product/Service Comparison: Assessing the features, quality, and benefits offered by competitors.

2.3. Key Questions Competition Research Addresses

• Who are the main competitors?
• What are their market shares?
• What are their strengths and weaknesses?
• What are their pricing strategies?
• What are their marketing tactics?

3. Defining the Target Market

The target market is the specific group of consumers a business aims to reach with its products or services. Understanding the target market is crucial for tailoring marketing efforts and product development.

3.1. Segmentation

The process of dividing a broad consumer market into sub-groups of consumers based on shared characteristics. Common segmentation variables include:

• Demographics: Age, gender, income, education, occupation.
• Geographics: Location, climate, population density.
• Psychographics: Lifestyle, values, attitudes, interests.
• Behavioural: Purchase habits, brand loyalty, usage rate.

3.2. Creating a Customer Profile (Persona)

A detailed description of a typical member of the target market. This includes their needs, wants, motivations, and pain points.

3.3. Key Questions Target Market Research Addresses

• Who are the ideal customers for the product/service?
• What are their needs and wants?
• Where do they shop?
• What motivates their purchasing decisions?
• What are their demographics and psychographics?

4. Market Research Methods - A Summary

Method	Data Type	Advantages	Disadvantages
Surveys	Quantitative & Qualitative	Relatively inexpensive, can reach a large audience	Low response rates, potential for biased answers
Interviews	Qualitative	In-depth insights, can explore complex issues	Time-consuming, expensive
Focus Groups	Qualitative	Generates discussion, reveals group dynamics	Can be dominated by certain individuals, potential for groupthink
Observation	Quantitative & Qualitative	Provides insights into actual behaviour	Can be time-consuming, may influence behaviour
Secondary Research (e.g., industry reports)	Quantitative & Qualitative	Relatively inexpensive, readily available	May not be specific to the business's needs, data may be outdated

Suggested diagram: A diagram illustrating the interconnectedness of demand, competition, and target market, with arrows showing how market research informs each aspect of a business strategy.