Market Research

What It Means

Market research is the gathering and analyzing of data about the best ways to advertise, sell, or distribute a particular product or service: finding customers and potential customers, researching competitor’s offerings that may be similar, and looking into other characteristics of the market. An entrepreneur (someone starting a business) thinking of launching a new line of briefcases might use market research to determine whether or not there is a potentially profitable market for (that is, enough buyers to make a profit selling) such items. An existing business dealing in double-paned windows might use market research to determine whether or not its current advertising campaign is working and to decide what forms of marketing (product promotion) to use in the future. Prior to redesigning its minivan model, a carmaker might use market research to determine what qualities that model’s target market (people who have bought or are thinking of buying the model) might be looking for in a new vehicle.

Market research is a complex and inexact field. There are numerous different ways of gathering and analyzing data about consumers and the marketplace, and it often costs a great deal of money to conduct the research process successfully. The price paid for making bad business decisions based on ignorance of the market, however, is generally much higher.

When Did It Begin

Market research was a natural outgrowth of the advertising industry in the early twentieth century. Advertising dates to ancient times, but the twentieth century saw the field grow in size and sophistication along with the rapid expansion of the American economy. One of the most prominent advertising professionals of the early part of that century was Daniel Starch (1883–1979); in the 1920s his company were pioneers in developing techniques of what we now call market research. Starch’s employees would stop people on the street, ask if they were readers of certain magazines, and then determine whether or not they remembered particular ads from those magazines. By balancing the number of times specific ads were remembered against the circulation size of the magazines in which they appeared, Starch and his colleagues were able to gain insights into what made some ads more effective than others and to use these insights when making future decisions about how to design future advertising campaigns.

In the following decades countless advertisers and businesspeople adapted and improved on Starch’s techniques. Today, virtually all advertising professionals and most businesspeople engage in some form of market research.

More Detailed Information

Some of the most common forms of market research are:

Recent Trends

The above types of market research do not represent an exhaustive list of the forms the process can take. Market research varies widely from business to business, and new technologies and innovations are constantly altering both how data is collected and how it is analyzed by researchers. Every type of business demands its own particular mode of market research, and new methods for predicting the behavior of consumers and markets are always being tested. Some businesses (especially large corporations) do much of their own market research through their marketing departments, while many other businesses rely on market research firms or advertising agencies to gather and interpret data for them.

Yet, even as the sophistication of market research grows and as increasing numbers of market-research firms specialize in particular techniques of data collection and analysis, some of the most common forms of market research today are as low-tech as they were in the days of Daniel Starch. For instance, the consumer surveys to which many of us have been subjected over the phone (usually right around dinnertime) are not very different from the surveys Starch’s company conducted on U.S. streets in the 1920s. Another constant in the world of business and advertising since then, one that no amount of technology or skillful data-mining can change, is that consumers are fickle. We buy goods and services for reasons that are not always clear even to ourselves, and we change our minds often. No matter how sophisticated market research becomes in the future, this fact of human nature will always, no doubt, limit the usefulness of the process.