Market research is the study of a given market by a business competing in it or looking to compete in it.
The research is used to estimate the viability of a company’s product or service prior to introduction into the market. Market research is also often carried out to guide changes in products or their marketing. Markets are often broken down geographically.
A company may perform its own market research or may hire an outsourced agency. A company’s efforts to see if their product is viable for a market can include researching how receptive customers will be to it with focus groups. Groups of consumers are selected individually for desired demographic make ups to help understand different customers. Market research efforts also include consumer panels to test ongoing changes in products and marketing and provide opinions. Another increasingly common and fast way for prominent companies to gather consumer opinions is through voluntary consumer submissions on social media sites.
Companies perform market research to attempt to limit the risk inherent in introducing new products or services and making changes to existing ones. Although market research costs can be significant they can also help ensure a product is truly ready for market. That may also ensure improved sales and profit. When a product has been assured of meeting customer expectations in price, reliability and functionality it can have a much lower risk of failure in a market.