Market research facts for kids

Imagine you have a great idea for a new product, like a super cool video game or a yummy snack. How do you know if people will actually want to buy it? That's where market research comes in!

Market research is like being a detective for businesses. It's an organized way to find out what people (your customers) want, need, and think. It helps businesses understand their target markets – the specific groups of people they want to sell to. By doing this, companies can stay competitive and make sure their products or services are a hit!

This research uses different methods. Sometimes, it's about talking to small groups of people in focus groups or doing in-depth interviews. Other times, it involves big surveys or looking at existing information. The goal is always to get useful insights to help make smart business decisions.

Market research is a big part of how businesses plan what to do next. It helps them understand the market size (how many potential customers there are) and who their competitors are.

How Market Research Started

Market research really started to become a formal thing in the 1930s. This was during the "Golden Age of radio" in the United States, when advertising became very popular. A person named Daniel Starch had ideas in the 1920s that helped this grow.

Starch believed that ads needed to be seen, read, believed, remembered, and most importantly, acted upon to be good. Advertisers started to notice that different types of people (called demographics) listened to different radio shows. This helped them understand who they were reaching.

The Gallup Organization also helped create public opinion polls. These polls are a lot like market research, but for what people think about general topics.

Why Businesses Use Market Research

Market research helps businesses understand what customers want and how they behave. This information is super useful for deciding how to sell a product. Peter Drucker, a famous business thinker, even said that market research is the most important part of marketing!

Businesses use market research to learn about:

• Market information: This helps companies know things like product prices, and if there's a lot of demand or supply for something. It also helps them understand social, technical, and even legal parts of the market.
• Market segmentation: This is like dividing a big group of people into smaller groups. These smaller groups have similar reasons for buying things. For example, you might divide customers by age, gender, where they live, or what they like to do.
• Market trends: These are the ways a market is moving, either up or down, over time. It helps businesses see what's becoming popular or less popular. If you have a brand new idea, figuring out the market size can be tricky. You might have to guess based on how many potential customers there could be.
• SWOT analysis: This is a way to look at a business's Strengths, Weaknesses, Opportunities, and Threats. Businesses also do this for their competitors to figure out how to sell their own products better.
• PEST analysis: This looks at big outside factors that can affect a business. PEST stands for Political, Economical, Social, and Technological factors. These can either help or hurt a company.
• Brand health tracker: This helps companies check how well their brand is doing. It measures things like how many people know about the brand, how much they like it, and if they keep buying it.

Market research can also measure how well marketing efforts are working. This includes:

How Information is Collected

Collecting good information is the backbone of market research. This can be done in a few ways:

• Observing behavior: Watching how customers act in real-life situations.
• Interviews: Talking to customers, potential customers, or other important people.
• Surveys and questionnaires: Asking people questions, either in person or online.

The information collected can be:

• Quantitative: This means numbers, like counting sales, website clicks, or how many people look at something.
• Qualitative: This means descriptions and opinions, like from surveys or interviews.

Turning all this information into useful ideas is a big challenge. Today, special computer programs can read lots of written feedback and turn it into numbers. This makes it easier to understand and use for making decisions. Sometimes, people are given rewards for sharing their information, like when drivers report traffic.

The Internet's Global Impact

The internet has changed market research a lot! It has connected many consumers and businesses around the world. Even in growing markets like China or Russia, the internet helps businesses reach more customers. Websites with cool graphics and content attract both businesses and everyday shoppers.

Social media platforms are also very important for market research, especially for younger people. For example, LinkedIn, Facebook, YouTube, and Instagram are popular places where companies can learn about what people like.

Market Research for Movies

Even the film industry uses market research! They test movie ideas and marketing materials to see what people think. Here's how:

• Concept testing: They check reactions to a movie idea, but this is rare.
• Positioning studies: They look at a movie script to find ways to market it.
• Focus groups: Small groups of people watch parts of a movie and share their opinions before it's released.
• Test screenings: People watch the whole movie before it comes out in theaters.
• Tracking studies: They call people weekly to see if they know about a movie before and during its release.
• Advertising testing: They measure how people react to trailers and TV ads.
• Exit surveys: People fill out surveys after watching a movie in the cinema to share their thoughts.

Market Research for Small Businesses

Small businesses and non-profit groups can also do market research. They can learn a lot by just watching what happens around their location. Doing small surveys or focus groups is a cheap way to get information from customers or donors.

While there's a lot of free information online (like statistics about populations), talking directly to people can be very valuable. Spending an hour talking to a few potential customers can help you really understand their needs and what problems they have. You can't get that kind of deep understanding from just a questionnaire!

See also

• Marketing Research Institute International
• Mystery shopping
• Nielsen ratings