It’s easy to see why market research and analysis are often conflated. Both equip decision makers with crucial intelligence around the current state of the market, helping leaders analyze trends and predict future scenarios. And to do this, both incorporate big data technologies. But they’re not the same. Let’s find out how they differ!
The concepts of market research and analysis are as different as the individual body parts are to the body. While market research deals with a focused view of the market, answering questions around customer behavior, market analysis takes a contextualized view of the market, revealing action items and trend progression. Yes, we’ll explain further below.
Market research is the process of examining the consumer base of a particular market. It is designed to create a complete understanding of the target market in terms of both existing as well as potential customers. To accomplish this, it incorporates primary, secondary, quantitative, and qualitative research methodologies.
Market research helps brands sort out:
There are many reasons why you would need to conduct market research. Below are just a few:
A lot of new products are created each year, but many of them fail. We wager that a big reason for this is poor market fit. Harvard Business Review’s list of five major factors comes very close to affirming our claim. If that is the reason, market research (or lack thereof) is the primary cause. Companies are usually in too much hurry or too trusting of their unqualified intuition to conduct proper market research and determine the viability of a product to the target market.
If you want to increase your chances of success, market research is your friend.
It costs to acquire new customers. Considering what it takes to create brand awareness, build credibility, and provide a winning customer experience, it’s no wonder that it costs, on average, five times more than customer retention. Does this mean businesses should shrink from customer acquisition? Not when there are ways to reduce this cost.
See, one of the main reasons why it costs so much is that businesses accomplish low conversion rates. Thus, the total cost of conversion divided by the number of new customers is high. Market research can help you boost your conversion rates and drive down the cost of customer acquisition.
While customer acquisition is difficult, customer retention is apparently easy. The average rate of retention is upwards of 60%. That’s three to 12 times the conversion rate. But is it really easy to sell to existing customers unless they are satisfied with their previous purchase(s)? Customer satisfaction is what fuels brand loyalty, advocacy, and a generally healthy customer relationship.
With market research, you can better understand your customers through their direct feedback, the sentiments of their peers, and the current consumer trends.
Market analysis is the process of examining all the variables in a particular market and how they interact to produce observed and future conditions. It is aimed at obtaining a clear look around the environment in which a business operates to uncover the true size of the market, state of competition, and growth trajectory.
To accomplish this lofty objective, market analysis applies the insights gathered from market research, and then some. It goes further to study the business models, production processes, technologies being used, partnerships being forged, and the resultant successes.
Some of the research problems in market analysis are:
BCG is a consulting firm working with leading businesses across the globe. The firm helps them solve some of their most pressing challenges as well advise them on how to move on new opportunities. Because of its critical function in the success of these organizations, BCG is especially concerned with market analysis using advanced platforms.
We learned this from BCG’s Michael Wahlen when he gave a LIVE presentation on how his team uses Quid to uncover trends and opportunities in the market. In particular, Wahlen’s talk centered on how BCG advised its manufacturing client on the market trajectory by first uncovering a battalion of more than 2,500 emerging competitors.
Market analysis allowed Wahlen and his team to scrutinize the incoming companies based on their sub-sector, their innovations, and capital range. This made them understand the level of threat and advise the client accordingly.
Here are three good reasons to conduct market analysis:
Creating a strong business model involves two main considerations: Pricing and costs. There are other factors to consider such as product category and target market. However, they are secondary to the first two. In a market economy, the majority of businesses have to set prices based on the market rather than internal deliberation. And the information you need to make these crucial decisions can be obtained through market analysis.
Product demand precedes product market fit, discussed above. Product demand is what tells you that there is an unmet need in the market. Product market fit is the fine tuning of your offering to make sure it meets that need; making it the preferred choice amidst the competition.
Market analysis shows you why there is an unmet need. Is it a hidden opportunity? Or is someone trying and failing? You need to learn from this information to save yourself from experiencing the same expensive mistakes.
Speaking of hidden opportunities, the market is full of them. A hidden opportunity would be something like a gap in the market that appears unexplored by others. It can also be a useful capability on top of your core business that you never thought could be packaged. Further, it may be the creativity of your team that produces new innovations you didn’t see coming.
Before you can explore these hidden opportunities, you need strong inspiration. And nothing comes close to the power of market intelligence.
Market research and analysis converge on some key points. But that’s only because market research is a part of the market analysis process. Other than that, they are distinct processes focused on different objectives, following different methods, and affected by different factors.
As a consumer and market intelligence platform, Quid is designed with both aspects of your business strategy in mind. It can reach across the web to gather all the relevant data needed while keeping you focused on your goals. It is built on cutting edge AI technology that enhances collection and analysis of all data formats, quantitative or qualitative. Further, it works seamlessly with other research tools, playing a true hybrid role in your market research and analysis ecosystem. And it all happens inside a single platform equipped with a powerful and intuitive dashboard that is easy to read and navigate.
And we didn’t even touch on the Intelligence Connector – for tool and insight integration! Be sure to reach out for a demo now and we will show you step by step how everything fits together on our platform to support your business and help you win again!