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When companies want to launch a new product, enter a new market or assess an existing product, they will always carry out a series of market researches. Why they do so?

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Introduction

When companies want to launch a new product, enter a new market or assess an existing product, they will always carry out a series of market researches. Why they do so? Because they need to minimize risks, otherwise they would probably make loss rather than profit. In this essay, I would explain what market research is, why and how it is invaluable. Market research is defined as "the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services."(Boyd, Westfall & Stasch, 1985) I would rather say that it is a study of why and what people buy, so that companies will be able to work out appropriate market strategies to make the sale of goods more successful, and it can also make a valuable contribution to companies' understanding of its products, its markets, and its overall business strategy when properly structured. `The two basic purposes of research are: � To reduce uncertainty when plans are being made, whether these relate to the marketing operation as a whole or to individual components of the marketing mix such as advertising or sales promotion. ...read more.

Middle

The main types of market research are qualitative research and quantitative research. I would like to focus on the former one which benefits company much more than the ladder one. A good qualitative research provides company invaluable information about market fundamentals: market size, market potential and market shares, hence, appropriate market strategy could be worked out by referencing to it. Qualitative research can also be called motivational research, exploratory research, psychological research, unstructured research, etc. These names reflect the different forms of qualitative research. The development of qualitative research was the result from an increasing awareness that questionnaire surveys did little to explain or predict consumer behaviour with the existence of variety of bias such as statistical bias, bias in questions, interviewer bias, bias in the interviewee. It is generally accepted that direct questioning of the consumer will often fail to get equally direct, honest answers because the consumer may not be aware of the real reasons for his or her behaviour, or may be aware of them but be unwilling to explain them. ...read more.

Conclusion

For example, researcher may find very difficult to choose the right sample for the research. This may lead to the invalidity of data. Market research is often very costly. As I mentioned before, it is approximately �5000 for professional researchers to do 1000 questionnaires or to employ psychologists to gain primary data by carrying out qualitative researches, or for a sales promotion. However, market research needn't to be very expensive. With the development of IT, the Internet has become an important tool for gathering marketing information, and a number of [1]free market research sources are available to small business owners. Library or, when available, a business library can also prove invaluable. There are varieties of useful business and industry resources that can be found in libraries, including company and trade directories, electronic databases, industry surveys, etc. Those are secondary data, which save both money and time to do the research. In conclusion, market research, from my perspective, is invaluable only when unbiased questions are set and right sample of interviewees are selected. Although invalidities may occur in some cases, it still enables decision-makers to make the right decision, thus improve the efficiency of allocation. ...read more.

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