A Market Research Analysis
A market research analysis must be comprehensive to encompass all aspects of a company's business. Consequently, companies will often use both primary and secondary research when conducting a market research analysis. Primary research includes information gathered by the company through surveys or personal interviews. Secondary research is information companies purchase from other firms, such as industry and competitive data. Companies will use both primary and secondary research to make business decisions.
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Market Analysis
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Companies will usually conduct a market analysis to better understand where they stand versus competitors. It is important for companies to know what share of the market they own in terms of dollars and units sold. For example, a company may have a 10 percent share of the market. Four other competitors may wield a 40, 20, 15 and 10 percent of the market, respectively. That leaves five percent of the market to the remaining competitors. Companies use market share information to determine their growth potential. Market analysis also entails studying certain extraneous variables that may affect a company's sales, such as government regulations or tariffs. For example, the tobacco industry has certain restrictions on advertising. Most market analysis data is available through secondary research sources. Companies that produce secondary research data include Nielsen, Forrester Research and The NPD Group.
SWOT Analysis
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A company may also use a SWOT (strengths, weaknesses, opportunities, threats) analysis as part of its market analysis. A SWOT analysis allows a company to compare its strengths and weaknesses against competitors, according to Quickmba.com, an online reference site. Company marketers can then exploit certain strengths to take advantage of opportunities in the market. For example, a company may use its strong distribution network, a strength, to gain additional shelf space over key competitors, an opportunity. Similarly, companies will need to be aware of various competitors exploiting their weaknesses. For example, a competitor with a strong engineering department may produce new technology that can render a company's existing technology obsolete. Therefore, the company will need to produce similar products to ward off this potential threat.
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Customer Needs and Satisfaction
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A large part of a market research analysis is understanding the customers' needs. For example, companies must know what products and services their customers want, and how much customers will pay. Most companies use market surveys to better understand their customers' needs. Market surveys can be conducted by phone, mail, in person or via the Internet. Companies can also determine customer satisfaction with existing products and services through market surveys. For example, a cable company may want to study the level of satisfaction with the customer service department. Hence, the cable company may ask customers to rate the department on timeliness in solving technical problems.
New Product Introductions
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Companies may also use a market research analysis to study the potential success of a new product introduction. In the process, marketing managers may conduct focus groups to test the initial idea or concept of the product. A focus group allows marketers to observe customers behind one-way mirrors. During focus groups, customers are encouraged to discuss their likes and dislikes of a particular product. Companies usually talk to small numbers of people in focus groups. Focus groups allow companies to make changes to products based on customers' suggestions. Subsequently, companies can further test the potential success of products through surveys. One important question for marketers is "what percentage of customers plan to purchase the new product?"
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