Market Research

Market research is the means by which organisations identify target markets and market segments, and estimate market potential.

Market segments are large, identifiable groups within a market while a niche is a more narrowly defined group within a segment. There are two bases for segmenting consumer markets: identifying consumer characteristics and capturing consumer responses; market research provides the information that enables both these activities. Marketers generally employ a five-step process for target market selection: identifying the appropriate targeting strategy, determining which segmentation variables to use, developing market segment profiles, evaluating relevant market segments, and selecting specific target markets.

The major segmentation variables for consumer markets are geographic, demographic, psychographic and behavioural. Marketers use them individually or in combination to develop a clear profile of the various market segments within a total market. To be useful, market segments must be measurable, substantial, accessible, differentiable, and actionable. Market research makes strong use of marketing tools and statistical techniques to find the answers to these information needs.

A company will use market research to evaluate the various market segments and decide how many and which ones to target: a single segment, several segments, a specific product, a specific market or the full market. If the company serves the full market, it must choose between differentiated and undifferentiated marketing. Companies must also monitor segment relationships and seek economies of scope and the potential for marketing to supersegments.