We explain what a market study is, what this review is for and the types there are. Also, the steps it uses and examples.
What is a market study?
A market study is a review done by companies in a niche market to determine how viable it is and how convenient, therefore, it would be to invest your money in developing it.
In short, it is a prior exploration that companies do to determine whether or not a given economic activity is lucrative or sustainable enough over time to be convenient for them.
This type of studies involves both the productive sector and the service sector and provides companies with all possible information about the consumption patterns of a given niche in a given geographic and social location. Market studies are not universal but particular and have a specific validity.
That is why market studies are usually done twice a year (semi-annually), to monitor how current markets are moving and what potential markets are emerging, so as to be able to foresee opportunities and also future risks and get better use of their assets.
In this sense, these analyzes are usually interdisciplinary involving specialists from applied economics, philosophy, statistics, communication, administration and management, among other specific areas.
What is a market study for?
These types of reviews have the task of inform companies as much as possible regarding the behavior of their markets of interest that is, of their potential or current consumers, to help them define their business strategy.
If a market study shows scenarios of high profit and growth in a new area, the company can invest money in that market niche; If instead it returns dangerous data, the company will act more cautiously. Market studies are key in decision making.
Types of market research
There are three basic types of market research:
- Exploratory Compile initial information about a specific market situation, based on secondary sources such as magazines, publications or interviews with experts.
- Descriptive. It undertakes market segmentation through processes of identification and quantification of consumption, that is, it makes a reading of the current state of the matter and expresses it in economic and business indicators.
- Casual. It seeks to establish causal relationships, that is, cause and effect, in the phenomena observed in a market. Above all, it explores the relationships between the sale and its possible objective causes.
Steps of a market study
Broadly speaking, the steps to prepare a market study should involve the following:
- Collect the information This involves going to different sources (digital, written, in-person) in both public and specialized media, always starting from the information that the company already has on the subject.
- Observe the demand. This means measuring what is happening in the market, to have an idea of the state of affairs. Surveys, visits to competitors and real contact with customers are key at this stage.
- Analysis of the offer. Once you understand the behavior of the market, or its main trends, it is advisable to take a look at the competition to see what they do well and what they do wrong, what they are right and wrong about, and what their weaknesses are.
- Define the objective. Based on all of the above, the objective of the study can be established and the information broken down based on the possible conclusions that can be obtained from it. That is to say: process the information taking into account what we are asked to understand, to move towards specific conclusions.
- Preparation of a final report Finally, the entire process will be presented, emphasizing the analyzes and conclusions, to the client. This report may include a SWOT analysis or the four “Ps”, or any other convenient method.
Market research example
A quick example of a market study could be, in the case of a toy store:
- Review the documentation on toy stores, the toy sector and the children's audience, both in specialized books and in reports and other informative material.
- Attend the toy store and conduct opinion polls, surveys and a study of the number of buyers vs. number of visitors, to know how many customers who enter the store really buy, and why.
- Repeat a similar study in two nearby competing toy stores, if possible. Compare your promotion strategies with those of the toy store analyzed, detailing, for example, promotional days, sale seasons, etc.
- Process the information collected to reach meaningful conclusions. For example: the competition attracts twice as many customers to its store, which is brighter and has an up-to-date window with the characters of the moment. However, it sells a similar figure to what the others sell.
- Offer conclusions based on analysis: the competition's advantage is appearance, but it does not sell more due to its high prices. An investment in decoration could attract a much larger audience and be paid for not with increased prices but with sales volume.
