Everything you need to know about Market Research vs Market Analysis
What is Market Research?
Market research, in essence, is an exercise undertaken to gather feedback and information directly from the customers, generally for judging the viability of specific business decisions.
It helps in addressing strategic questions about brand management, product development, and consumer perceptions.
McDonalds, the globally popular fast-food chain, for example, uses on-going market research to focus on: what products are well received? What prices are consumers willing to pay? What TV programs, newspapers and advertising consumers read and view? Which restaurants are most visited?
The data gained through this research is then used by McDonalds to gauge the impact of their decisions on the business, and to know whether their customer base is growing or not.
Similarly, In most cases, market research serves to prove or disprove a hypothesis: let’s say you are considering launching a new product with millenials as your target audience, but before going ahead with this you want to be sure that millennials are indeed looking for such products in the market.
To gain this insight, market research comes to your rescue: you ask your target audience themselves if your planned product is something they would be interested in, and depending upon the aggregate result of their answers you decide whether to go ahead with the launch or not.
With the inroads that technology has now made into the world of marketing, it is no longer necessary for businesses to depend wholly on traditional surveys for conducting a market research. As an alternative, with the right solutions and services to provide the necessary data, you can also track usage habits and shopping behavior of your customers.
What is Market Analysis?
The main difference between market research and market analytics is that while market research is focused on collecting data directly from the market and customers, market analysis pursues a broader perspective of putting together data and insights from a wide variety of sources (including market research) to evaluate all possible options of growth and business forecasts for the times to come.
According to a study by Analytics India Magazine and AnalytixLabs in 2017, the total analytics/ data science/ big data market in India was estimated at $2.03 billion in revenues, growing annually at 23.8%.
This trend of extensive analytics usage speaks volumes about the increase in the relevance of market research analysis and makes it imperative for any business looking into the future to explore this avenue.
Some companies, like Verizon, picked up in the race early on. In 2003, through extensive research and analysis, Verizon realised customers’ need to retain their existing numbers while switching carriers, and offered services providing this option.
The move resulted in a tangible customer preference for choosing Verizon and had customers flocking happily to the network.
Market Research or Market Analysis?
Market Research or Market Analysis? An oft-asked and oft-wondered about question, is actually the wrong question to ask. This is so, in the first place, because these two are merely blanket terms to cover a whole range of methodologies employed by different businesses to satisfy their particular needs in the best possible way.
Secondly, and most importantly, market research and market analysis are not alternatives to each other. On the contrary, they work best in conjunction with each other.
This diagram well articulates the relationship between market analysis, research, and other related components:
As is apparent from the diagram, a better way to address the supposed choice between market research and market analysis is to understand that the former is a component of the latter.
In other words, the data collected through market research is fodder for market analysis, leading, in conclusion, to insightful business decisions.
Analysis adds the element of qualitative perception to the quantitative approach of market research. When used as a two-pronged tool, employing the benefits of both primary and secondary research to really know the customers, market research and analysis can help you ensure that you are delivering the right message or product, to the right people, at the right time.
A great example of this is the way popular toy-industry giant Lego tapped into, and utilized, a hitherto unexplored customer segment. For decades, Lego had been planning and manufacturing their toys with great success, however, market research analysis showed that only 9% of children playing with their toys’ were girls.
Based on this primary statistic, Lego conducted an extensive 4-year long study involving 3500 young girls and their mothers.
Based on the data collected from this study, Lego came up with a new line of toys called Friends, which had features that the analysis of research data recognized as being most enticing to the target audience.
For example, the brick colors were made more vibrant, the packaging changed, and figurines were made slightly bigger to accommodate accessories such as hairbrushes and purses in their grips.
Similarly, Starbucks did exercises in market research and analysis to find out why existing customers switched brands, and discovered that people are increasingly preferring dairy-free milk alternatives.
Based on this insight, Starbucks started offering soy milk, almond milk etc, successfully bringing about a steep increase in sales.
Making the best of it with a balanced approach
As a business owner, your end objective always is to bring about growth and positive change in every vertical, be it brand perception, or sales, or any other.
To achieve this growth, it's important to have utmost clarity on the future course of your business or brand, and for that you need to know as much as you can about your customers, your market, your competitors, and other factors specific to your business domain.
From a short term perspective, undertaking a big market analysis may seem like a humongous enterprise which will eat into your day-to-day business activities, but ultimately it is something that’s necessary for you to scale up your business and avoid stagnancy.
To ensure that you can single-mindedly focus on your business, it is also a good idea to delegate data collection and analysis to organizations which are specialized and experienced in ensuring that you get the best and most reliable results for the money you spend.