Why do companies use market research?

Posted by Ray Poynter, 30 December 2012

More Blogs

I am currently working on a project for Vision Critical’s University, creating an introduction to market research, which should appear in a month or so. As part of that project, I’d like to share some of my thinking about why companies conduct market research, to see what my peers think, for better, worse, or different?

The four main uses of market research, by commercial organisations, in descending order of importance (in terms of spend) are:

  1. Monitoring performance, for example ad tracking, brand awareness, viewing figures, usage, customer satisfaction, mystery and shopping.
  2. Finding things out, for example the size of a market, current usage patterns, and market opportunities.
  3. To test ideas and products, for example ad testing, pack testing, and pricing research.
  4. To help create new products, ideas, campaigns etc.

Monitoring studies tend to be ongoing (as opposed to ad hoc) and they tend to be quantitative. The 2012 ESOMAR Global Market Research report shows this is the largest category of research spend, accounting for between one-third and half of all research dollars (depending on which category you assign some of the items to). As well as large-scale quant trackers, other approaches include automated and online measurements, mystery shopping, community panels, and social media research.

To find things out
This type of research is often called exploratory and is normally conducted ad hoc (i.e. not as part of an ongoing study). A wide range of research techniques are used for this purpose, for example: qual, quant, research communities, social media research, and semiotics. The specific aims of the research will often dictate, or at least suggest, a specific approach. For example, a market sizing study is typically going to require a large scale quantitative study with a careful sampling plan. By contrast, understanding the role of tea in a community’s life could be tackled with a wide range of approaches, from ethnography at one end of the spectrum to analysing loyalty card data at the other.

Testing ideas and products
This category includes ad testing, concept testing, product testing, much of NPD (new product development) research; it also includes testing whether a model or idea is true. This type of research is usually conducted ad hoc, utilizing qual quant, and/or research communities. Some of the newer brain and biometric techniques find their home in this category, in particular in ad testing. For example: fMRI, EEG, implicit association, eye-tracking, and facial coding.

Creating ideas and products
Although qual research, especially focus groups, have been used for many years to ‘ideate’ new products and services, this category of research has grown considerably since the arrival of social approaches, in particular research communities. Of the four categories listed here, creation is by far the smallest, but perhaps one of the most exciting.

Your thoughts?
I’d love to hear your thoughts. Do you think these four categories broadly encompass why commercial organisations conduct market research? Would you add, delete, or change any categories? What about the examples within the categories, do they seem about right to you?


Other posts on this topic:

9 thoughts on “Why do companies use market research?

  1. Market research can help to reveal key aspects of the competitors’ products, services, marketing strategies, and target audience. Using this information within your own campaigns can help to lead in the market over your competition and add value to your business or brand.

  2. Well this is exactly what thousands of people just like you are doing right now. They are called ‘Social Media Managers’ and they are getting paid great money to work online doing simple tasks on Twitter such as:

    Sending out ‘tweets’ for businesses
    Following customers and other related businesses
    Uploading photos and videos to Twitter
    Generating more followers
    Most of these jobs don’t require any prior experience and the only skills you need are a good knowledge of how to use Twitter. Click the link below to get started:


Comments are closed.