Market research and marketing research are two words that sound alike – as if they have exactly the same meaning. Both terms are often used interchangeably but they have differentiating qualities. Although market research may play a considerable role in marketing research, yet, business experts say, the marketing angle is uniquely different. Market research focuses on a specific market while marketing is a gradual process focused on a broader level.
First, let’s break down the distinctive meanings. Market research allow Entrepreneurs to narrow down a specific target of consumers to probe into the behavior of an identified group. Marketing research is different, different because it deals with, as previously mentioned, a broader range of consumer topics.
Market Research – Marketing Research
A Master of Business Adminstration (MBA) differentiates market research this way: “Technically there is a difference. Market research deals specifically with the gathering of information about a market size and continuing trends.”
The American Marketing Association (AMA) explains marketing research with deeper focus: “Marketing research is a function that links the consumers and public to the markets through information, information used to identify and define marketing opportunities, evaluating marketing actions and problems.” See AMA definition of marketing research
Therefore a business person may ask. What do these market techniques and their related terms really mean? What is the most effective way to apply market research or marketing research?
Examining Market Research
So let’s examine market research: Once an Entrepreneur define the market scope of a potential business, the next task is to determine why a consumer or business would purchase products from the Entrepreneur rather than purchase from a competitor. Keep in mind: the AMA explains that prior to investing in a start-up business you must find a niche to identify your client’s motivation to purchase your products which is where market research forms the backbone to find targeted customers. To compile this much-needed information, it is necessary for Entrepreneurs to conduct market research by utilizing data from such places as the Chamber of Commerce, the U.S. Census Bureau, and the Small Business Administration(SBA). These resources provide valuable information for business owners.
For example: Shawn O’ Connor, Founder and CEO of Stratus Prep, recently told Forbes about a tool created by SBA called Sizeup. This newly developed tool allows Entrepreneurs to map out competition which means a business owner can easily input the city and state where a business is located to ferret out the competition. According to SBA, numerous competitors highlighted in certain geographic areas, are colored in orange, while areas with potential customers are highlighted in green color.
Prior to starting Stratus Prep, the owner, O’Connor, held focus groups to identify the market size and willingness of consumers to pay for services. This process empowered O’Connor to identify features most important to potential customers. Comparing consumer information to structure cost after expenses, O’Connor soon discovered if his business could turn a decent profit based on the amount consumers were willing to pay.
According to “The Market Research Event Blog,” Shawn O’Connor stated, “You may feel attached to your business idea and wish to change nothing about it, but after conducting a survey you may find that customers are looking for different service or additional features. So, don’t scrap your idea, but consider adjustments to accommodate your customers’ demands.”
Starbucks used a similar market research approach. World renowned for its instant coffee and tea, delicious sandwiches and flavored cappuccino, Starbucks is also popular for an attractive atmosphere where various professionals, college students, celebrities, wealthy and poor people can eagerly hangout and enjoy free Wi-Fi while dining out. Starbucks now own over 20,000 locations in the U.S. including overseas.
Marketing research applies to a broad range of situations; this strategy provides decision makers the information needed to find solutions to business-type problems, such as the following:
(1) Are customers satisfied with your product or service offering?
(2) How will customers respond to a decision to change a price or product?
(3) What kind of feedback is a business getting from customers?
(4) How will competition respond and possibly allow entrepreneurs to capitalize in a given market?
Marketing strategy, according to About.com, falls into the following categories:
(1) Problem Definition: The problem is the focus of your research. Example: Why are sales soaring in the Midwest, but dismal in other parts of the country?
(2) Data Collection Method and Needs: How will you collect the data needed to solve the problem? Will you use surveys, telephone calls, focus groups or the internet?
(3) Determine Sample Method: What sampling method will you use? Sampling represents those you will collect information from. Will it be a random sampling, or a sampling containing a similar element?
(4) Data Analysis: How will you analyze the data? Will you use software or do it by hand? How accurate do the results need to be?
(5) Determine Budget and Timeframe: How much are you willing to spend on the research and how soon must the research be completed?
(6) Data Collection: Proceed with data collection based on answers in Steps 1-5
(7) Analysis of the Data: Conduct the analysis of the data that’s been collected in previous steps.
(8) Error Check: Check for errors in data. It is not uncommon for errors to be discovered in collected data. Errors can be in the sampling method, data collections, as well as analytical mistakes.
(9) Create your report: The final step of marketing research is to draft a report on your findings. Your report should contain tables, charts, or diagrams. It is important that your report clearly communicate the results found in your research. Your findings should lead to a solution to the problem or problems identified in Step-1.
The Bottom Line
Bottom line: the solution to most business problems can be found in marketing research. Though market research and marketing research have similar but different purposes, both topics provide opportunities for asking questions, finding answers and using those answers to become a better marketer and Entrepreneur.
For more information on marketing or marketing research, consider reading the book: Basic Marketing Research Volume 1: Designing Your Study: by Scott Smith,