Market Research: Phases, Analysis, and Business Cycles
The Importance of Market Research
Market research companies have discovered the needs of consumers when they get good results from a product they create and sell. It is necessary to gather, process, and analyze information about the general environment, competition, and consumers. This is necessary information for the planning of actions that will be carried out in the company and allows for making major decisions.
Phases of Market Research
1. Definition of the Goal of the Research
Before starting any study, it is necessary to be very clear about what is intended to be known and where you want to reach. There is a danger of misdirecting it, with the consequent loss of effort and money. An objective could be the detection of consumer needs for a product to create and launch a new one or increase the market share of the company’s products.
2. Design of a Research Model
It is necessary to determine how the research will be carried out and the sources of information. Internal sources include information from the company, such as reports prepared by the company, interviews with executive staff, and management of the company’s distribution. External sources include official statistics, published information such as annual studies of a particular sector nationally or internationally, inquiries carried out by the company, and information on competition, customer preference, and changes in the general environment.
3. Data Collection
The data collection process is usually difficult and expensive. There are two types of data:
- Primary data: This is not structured and must be collected specifically for the study. For example, survey results on consumer preferences.
- Secondary data: This is structured information that is quickly available. It has been previously collected for another purpose. For example, census results.
To approach what is to be investigated and reduce costs, the first phase of the study uses secondary data. This involves removing information from within the company (interviews with the management team, suppliers, distributors) and from outside. If the process is viable, the collection of primary data begins.
4. Classification and Structuring of Data
Once the desired data is available, a classification is made using statistical procedures (graphs, tables, etc.).
5. Analysis and Interpretation of Data
This is a fundamental phase of the process since the decision on market intervention will depend on the result obtained.
6. Presentation of Results
A comprehensible report is created for commercial managers (a synthesis of work). It includes:
a. An analysis of the problem (the approach and objectives intended to be achieved with the study).
b. An analysis of the methodology and results.
c. Technical annexes (collection of tables and graphs with the results of the analysis).
d. Conclusions establishing the recommendations and consequences of the investigation.
Analysis of the General Environment
The surrounding reality must be analyzed because any change could affect decisions.
- Regulatory Environment: It is necessary to know the set of laws that regulate the economic activity (product safety regulations).
- Technological Environment: It is necessary to be up to date on the technological improvements that are produced and that affect the manufacturing process. Better technology equals better costs, which equals a better product price to compete.
- Socio-Cultural Environment: It is important to know the changes that occur in consumers: income, modes, tastes.
- Economic Environment: The country’s economy presents economic cycles. Depending on the objective of the study, it will be interesting to know what the economic prospects are.
- Environmental Considerations
Business Cycles
Long Cycle
It begins with the capture of money and its immobilization in fixed real assets (buildings, machinery, etc.) that wear out due to use, obsolescence, etc. The annual amortization cost is incorporated into the product, which allows recovering part of the investment each year, and when the assets are totally amortized, the funds will be used to renew them and thus start another cycle. The duration of the immobilization of each element is different, and its recovery occurs after several years.
Short Cycle (Operating)
It begins with the immobilization of resources in the acquisition of materials and supplies, continues with the production, marketing, and sale of the product, and ends with the collection of invoices from customers and the recovery of the money invested in current assets (Average Collection Period).