Introduction to Market Research

Market research is the activity of gathering, analyzing and interpreting data about target markets and consumers, their needs and their preferences. It helps companies understand the characteristics, spending habits, location and needs of their customers and learn more about their industry and their competitors. It allows business owners to determine feasibility of a business before committing substantial resources to the venture.

Market research is an essential part of business planning process as it provides data to solve marketing challenges that a business will most likely face. It can provide market segmentation by identifying specific groups within a market, and product differentiation by creating identity for product or service to differentiate it from its competitors. These components of business strategy process would be impossible develop without market research.

There are two types of data that can be used for market research:

  1. Primary – company compiles or hires someone to compile the research for them
  2. Secondary – research is already compiled and organized for the company

Companies can choose which type of data to use depending on what their product or service is and how much time and money they can spend.For primary research, the targeted group can be questioned either by quantitative or qualitative methods. Quantitative methods work with structured data, perform statistical analysis and derive objective conclusions. Qualitative methods compile unstructured data and derive subjective conclusions.

Quantitative market research can be conducted using two techniques:

  1. SurveysThe most widely known and utilized method. This technique is good to use when researchers want objective measurements and have large samples to query and resources (time and money) to conduct a survey. Surveys are useful when the researcher is beyond the exploration portion of their research and wants to test more specific questions. They can be done using several formats: mail, telephone, email, internet or in-person.
  2. Experiments and Field TrialsThese are generally used for scientific testing, where specific variables and hypotheses can be tested. They can be conducted in controlled environments or out in the field. This method is often the most expensive method and it usually takes long.

Qualitative market research can be done using the following methods

  1. Personal InterviewThis technique is useful when the researcher is interested in digging deeper into a specific issue, searching for customer problems and/or understanding psychological motivations and underlying perceptions. It involves a moderator (interviewer) and a participant (interviewee). The interview format can vary depending on the goal of the interview: 3 highly structured with specific questions or loosely constrained conversations. This method allows the interviewer to get detailed descriptions of individual experiences.
  2. Focus GroupThis method involves a target group that fits a target demographic depending on the product or service of interest and a knowledgeable moderator, who can manage group dynamics, investigate skillfully to obtain deeper understanding of issues and capture broad spectrum of opinions. During the process, a moderator guides the discussion to get participants to discuss the topic among themselves. This technique is appropriate when the researcher is on exploratory research stage and they are interested in learning about users’ needs and behaviors. It can be useful when a company needs to make tradeoffs among several customer needs and wants to prioritize them. It can help companies learn about their competitors and the trends in their industry.
  3. ObservationThe biggest benefit of this technique is that it can measure the actual behavior of customers, as opposed to their reported behaviors. This is important to take into consideration when there tends to be discrepancies between people’s reported and actual behavior. This technique provides reliable insights to researchers.

History of Market Research in the US

1. 1900-1940s: Quantitative Questionnaire Era

The first initiatives for market research came in 1920s when Daniel Starch developed a theory that “advertising had to be seen, read, remembered and acted upon to be considered effective.” Starch asked people on the street if they read certain publications and if so, whether they could remember any specific ads within them. Then, he compared the number of people he interviewed with circulation of the magazine to measure how effective those advertisements were in reaching readers of the magazines.

After Starch, a man named George Callup further developed Starch’s practice by asking people an advertisement they can remember without showing them the publication. Soon after Starch and Callup, many companies started using similar practices.

2. 1940-1960s: Qualitative Questionnaire Era

After World War II, consumerism became more prevalent in the US. This brought the need to better understand customers. Researchers started integrating earlier surveying practices with new practices to go beyond numbers. In this era, focus group method became more prevalent. With these new practices, researchers noticed discrepancies between what people said they did, thought or liked as opposed to what they actually did. Soon after, a man named Ernest Dichter came up with a new form of research called “Motivational Research” that is based on Freudian psychoanalysis methods. Dichter believed that every product had a soul and embodied values beyond its purpose. He proposed that advertisers can understand how to market a product by figuring out the personality of the product. During this era, researchers started observing consumers interacting with products in simulated or real environments to collect data.

3. 1960-1980s: Refining the Process

In this era, quantitative methods started becoming prominent again with the developing new technologies, such as phone, computer and internet. A researched named John Howard started incorporating multiple social science principles into his research. The researchers of this era focused on not just buying a product but the experience of consuming a product.

3. 1980-Present: Digital Era

With diverse tools and methodologies at disposal, the researchers can provide a more comprehensive view of the customer. Among these tools, internet has had the biggest impact in this era by allowing researchers to conduct online surveys on much larger scales and research communication and culture with ease. In this era, researchers came into the realization that consumers don’t exist in a vacuum, their choices are shaped by their ecosystem.

Today, US has the largest budget in the world for market research. In 2016, the annual revenue from market research was 19.49 billion dollars and 18% of market research spending was for Online surveys.

Revenue Of USA Market Research Companies

Worldwide Revenue Of Market Research 2016

Distribution of Market Research USA-2016

Online Surveys

Over the last 35 years, technology has revolutionized the way surveys are conducted. The initial online tools offered little more than what paper questionnaires did. Today, there are wide range of tools and services available with wide range of features and prices. Despite the advances in online survey research and their increasing popularity, there are still potential weaknesses and threats.

Major strengths of Online Surveys

  1. Global reach – when most of a society has internet access, lack of representativeness disappears
  2. Flexibility – online surveys can be conducted in several formats (email with embedded survey, email with link to survey etc.) and can easily be tailored to customer demographics and language
  3. Speed and timeliness – speed and global reach of the internet allow real time access for interactions with geographically diverse respondent groups
  4. Technological innovations –Internet based technology can reduce possible bias by randomly rotating choices to give more complex and randomized displays unlike paper questionnaires
  5. Convenience –respondents can answer at any convenient time for themselves and as long as they prefer as opposed to phone surveys at possibly inconvenient times which can annoy the respondents
  6. Low administration cost –surveys are self-administered, the preparation cost is cut with the use of survey software and they don’t require postage or interviewers

Potential Weaknesses


  1. A Brief History of Market Research:
  2. Customer Research Easier in Digital Era:
  3. How Online Surveys in Market Research are Driving Change:
  4. Online Market Research (Market Research Handbook):
  5. Online panel research: History, concepts, applications and a look at the future(Chapter 1):
  6. Online Survey Growth Mirrors Mobile Access Increase:
  7. Online Survey Pro and Cons (Module 6 Video):
  8. Online surveys in marketing research: Pros and cons: n_marketing_research_Pros_and_cons/links/56f4310608ae95e8b6d06492/Online-surveys-inmarketing-research-Pros-and-cons.pdf?origin=publication_detail
  9. The AMA Gold Report 2017 Top 50 Market Research Firms:
  10. The Changing World of Destination Market Research: A Comparison of Methods Utilized in Driving Traffic to an Online Survey:
  11. The Value of Online Surveys:
  12. Using Internet Data Collection in Marketing Research:

Just a member of the lovely Survey Expert Team.

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