Witers: Sille Sinor, Shin Seungyeon and Thais Araujo

1. INTRODUCTION

Market research has been a crucial factor in the strategic progress of various industries since the 20th century. Since its beginning, it has enabled managers to make well-informed decisions based on clear objectives and real-world data. However, it is important to acknowledge that this practice has not been universally adopted across the globe. The global business environment continues to be profoundly shaped by cultural differences and varied ways of conducting operations (Hague P. Hague N. & Morgan 2013, 3)

In this essay, you will have a high-level understanding of market research. The text will use the project Pikku-Brasilia from the teampreneur SYNTRE as an illustrative case study throughout the entirety of the paper to exemplify the concepts and principles discussed.

1.1 KEY TERMS:

Market Research: It’s main focus of the essay, referring to the process of collecting, analyzing, and interpreting information about a market. Market research, in this essay, will be especially related to business decisions.

Data Analysis: The process of examining collected data to find out relevant insights and patterns.

Qualitative Research: The research methods that consider attitudes, perceptions, and behaviors through open-ended questions, interviews, or focus groups.

Quantitative Research: The research method that collects large numerical data and statistical analysis to conclude. 

1.2 ROAD MAP

If you ever tried to develop a new product or service, you may have tried to do market research before launching it or at least heard the importance of doing it. In fact, market research is a must for entrepreneurs to develop a successful strategy for the future. (Wenzel 2012) But what is market research? Who needs market research and why is it important? How to do it and what kind of tools are there? 

1.3 WRITERS POSITION

The purpose of this essay is to present a clear understanding of the relevance of market research in business. We want to prove that market research enables better decision-making and reduces business risk. You should find pieces of evidence to prove market research is not only useful but an indispensable tool in many processes of a business since its beginning.

2. INTRODUCTION TO PIKKU-BRASILIA

Pikku-Brasilia, initially established as a kiosk selling açai sorbet in Finland, serves as a pioneering proof of concept, an experiment to test the demand for açai products in the Finnish market. This venture not only enabled the evaluation of the demand for açai products in the Finnish market but also laid the groundwork for the company’s primary focus on the B2B sector. The kiosk operates as a tangible model showcasing the potential of the larger B2B project.

3. BASICS OF MARKET RESEARCH

3.1. What is market Research?

Market research is a process that determines whether a product or service can work successfully or survive in the market, and it is conducted directly with potential customers. Essentially, the purpose of market research is to reduce risks in business. So, what is market research, and what is not? Is it something that is only done before launching a new product on the market? What about already existing products? Does it require market research?

To begin with, market research is a fundamental part of a business plan. This is because it identifies market needs, provides an understanding of the market and competitors, helps companies set financial targets, etc. (Wenzel 2012, 1-3) Also, the results and data gathered from market research can be used in many other ways: to decide on the final design of the product/service, how to position it in the market, and to make strategic decisions for the future. (Hague et al., 2013, 2)

Igor Ansoff’s products and markets matrix explains how market research can be used in 4 different situations: when the product is new or existing and when the market for that is new or already existing. If you are doing market research for an existing product in an existing market, it can give data on how much of customers are satisfied and learn how to maintain a competitive edge. Market research for new products in an existing market can show if the new products can be adopted to the market, on the other hand, it can identify new territories for products/services in a new market. What about new products in new markets? You can get unmet needs and an understanding of unfamiliar markets. (Hague et al., 2013, 3-4)

Figure 1. Products and Markets matrix

Market research is not a one-time activity. As shown in the figure below, it can be used at three levels of the stages: Youth, Maturity, and old age in the product/service life cycle. In each stage, the role of market research is different. In the youth stage, it can be used as a basis for setting the price or shaping the details of the product by identifying unmet customer needs and estimating demand. The role of it gets more significant in the maturity phase as it shows how to build a brand and develop a competitive advantage. Moreover, as a result of customer satisfaction studies, the strengths and weaknesses can be modified. It is interesting to notice that the importance of market research increases as a product/service is facing maturity level and as it gets to old age the demand for it is slowly decreasing. Lastly, in old age, it can work as a way to refresh or reconstruct the product. (Hague et al., 2013, 3-4)

Figure 2.  Levitt’s Market Research Cycle

3.2. Why is Market Research important?

As it was mentioned above in the definition of market research, there are many reasons why it is important. At the beginning stage of building a product or service, it is very common to make assumptions about many things, such as possible customers, markets, and competitive advantage. Through market research, it is possible to identify those assumptions and validate them. More importantly, it will be a guideline that companies can use to make almost any business decision, from how to increase profitability to what sales budget they need for next year. Considering that it is not surprising that some of the market research costs up to $200,000 of money.

There is no need to repeat that market research helps understand customers. As with increasing profitability, customer-focused market research is linked to sales. Did you know that 8/10 customers say they are willing to pay 25% more for better customer service? And 3/4 of customers switch to another supplier because of poor customer service before price. (Hague, Paul N, et al. 2013, 15-17)

3.3. What is the process of Market Research?

The Entrepreneur’s Guide to Market Research provides a simple and easy-to-follow outline for market research. (Wenzel 2012)

1. Market Demographics: Develop a demographic profile of the most typical customer. Make a profile with the information of age, race, gender, income, type of business, and geographic location.
2. Market Size and Growth: Estimate the number of potential customers and sales. Forecast market growth by summarizing demographic, social, and technological changes. Then, summarize and visualize the gathered information by using a table or a graph.
3. Market Needs and Trends: Find out the needs and desires of customers that the product or services can fulfill. Research some trends and changing needs of customers that affect your market’s growth whether it is positive or negative.
4. Distribution and Spending Patterns: List and discuss what kind of distribution channels are there in the market currently, and how the customers and suppliers can be distributed geographically. Identify and rank the main ways customers choose a supplier. Was it price, location, service, or quality? Then discuss the typical purchase quantity or amount of money.
5. Competition: List major competitors’ goods and services: their price ranges, level of customer service, locations, strengths, and weaknesses. Then identify your competitive advantage.

The whole process can be carried out as follows (Hague, Paul N, et al, 2013, 8-11)

BriefProposal→Commission→Qualitative Research→Quantitative Research→

Analysis→Reporting. A brief is a statement of the problem and opportunity. It is a critical document as it defines what is the objective of the research and what are the expected outcome. The plan for how to achieve objectives and how to obtain the information is shown in the proposal, which covers the use of qualitative and quantitative research methods.  Qualitative and quantitative research are complementary to each other. Qualitative research is about ‘understanding’ rather than simple measurement, whereas quantitative research is conducted amongst a sample. An easy way to understand the difference is from this example: “A is better than B” is quantitative information but “How does A work better than B?” is qualitative information. After the fieldwork and data collection, the analysis of the data provides the bigger picture. Then, the interpretation of the analysis and presentation of it is the last stage of the process. (Twin 2023, p8-11)

4. Researching Methods

When doing, market research it is important to choose wisely the used research method that benefits best the research and what we aim with it. There are two main types of research methods: Qualitative and Quantitative. It is good to understand how these two different from each other and how it benefits the research.

4.1. Qualitative research

Qualitative research is research which is used to gain insights into underlying motivations, reasons, opinions, and feelings of people. Qualitative research uses and is non-numerical data. It utilizes methods which cannot be measured or examined in terms of quantity, intensity, or frequency. Except in cases such as, for example, an interviewer would fill out a questionnaire on behalf of the interviewee by asking questions which are Yes/No and on a scale to 1-5. With such an interview setting, quantitative information is gathered, but if, for example, the interviewer would ask further questions on why did the interviewee answer in the manner they did, this would be qualitative information. (Bhandari 2023)

4.1.1. In-depth-Interviews

In-depth-interviews are typically more exploratory in nature. This means the questions are open-ended, which allows participants to provide a more detailed response which is useful. Along with that, interviews tend to be flexible in structure, which lead to a more dynamic and responsive conversation, which ultimately leads to more richer results. There are many benefits with qualitative interviews, for example, it can be usefull when trying to find out the hypothesis, in other words, is the “thing” we are trying to figure out, or what we guessed to be true, actually true or not? This can save businesses a lot of resources, this is because without the interviews and “testing” the hypotheses, businesses could make a wrong decision and ultimately lose resources, which could have been simply avoided with interviews. Furthermore, typically with interviews smaller samples are typically acceptable. However, qualitative interviews also have their downside, for example, subjectivity. One’s opinion might be completely different to ones others, ultimately, if we for example on accident, or by mis judgement, asked a certain “type” or group of people, the answers we get from them might be skewed towards a certain side, and hence might be also biased, leading us or a business to make a wrong decision. Another problem is that interviews are time-consuming, first you have to find the right mix of people and have it in a sense ‘randomized” to bias is also minimised. Futhermore, there is risk that the interviewer themselves may be biased, for example, by asking questions which push their own agenda. Ultimately, the objective of a qualitative interview is to go more in depth regarding the matter to understand better the viewpoints of the customer. This is due to the fact that these interviews tend to be more loose in structure and more open to dialogue, which give us those more in-depth responses, making it an effective way to conduct market research. (Anpar Reasearch 2020) 

4.1.2. Observations

There are many ways how to conduct qualitative research, with the most common being, Interviews, focus groups, case studies, past data, and with observation. Giving an example, observing is where a researcher observes and records behaviours and events in their natural setting without directly intervening, which also leads to less bias regarding the information received. Ultimately with these methods, businesses and organisations can make more informed and ultimately effective decisions. (Anpar Reasearch 2020) 

4.2. Quantitative

Quantitative research means the process of collecting and analyzing numerical data, and statistical information. It mainly focus is to find patterns and similarities, wich we can use to make predictions or test casual relationships or generalize the occurrence to be norm in the population. Quantitative is straightly focusing on different methods of how to gain data and how to analyze it to find the similarities and patterns in it, without going into depth reasoning. It only observes that the occurrence or pattern of the data and makes an assumption regarding it. (Bhandari 2023)

In quantitive research these key characteristics listed above are mostly involved to the research. 

1. Measurable variables; meaning usage of averages, percentages, and correlations so it is easy to make comparisons and interpretations. 
2. Standardized research instruments; using for example surveys and predefined response options, so we are able to ensure consistency in data collection and analysis.
3. Random sampling of participants; typically quantitative researching involves a large and diverse sample size to ensure the findings are representative of the population being studied. Also picking of the order who are sampled needs to follow randomizing, other wise the possibility of tampered research is high.
4. Data presentation in tables, graphs, or figures; usage of these helps the keyholders understand the study and results.
5. The ability to predict outcomes and casual relationships; this refers the result we are able to give after analyzing the data we have collected.
6. Close-ended questionin; respondents select prefined response options to allow easy categorization and numerical representation of the data.

(Guafano 2023)

To make quantitative research in market research one could use, Market Surveys, Product Testing, Pricing Studies, Customer Satisfaction Surveys or Usage and Attidute Surveys. Most of these are made by using surveys that focus on different objectives. They are good to get understanding of the popular opinion and to understand customers and the market. When making a survey the focus should be in what kind of questions are made, to whom and what measurement is used. (Hague P. Hague N. & Morgan 2013)

5. PIKKU-BRASILIA’S MARKET RESEARCH

The PB team did not initially plan out the steps for conducting market research. However, as we’ve explained throughout this text, market research isn’t just beneficial but also an essential tool for starting a business. Interestingly, the team unintentionally followed the steps of Twin’s theory: researching, analyzing, and reporting.

The type of research they conducted was qualitative, primarily through observation. The team aimed to gain insights into the motivations, reasons, opinions, and feelings of people related to the main product sold in their kiosk, which is açaí sorbet.

When conducting observations, it’s crucial to ensure that the observer is well-trained, equipped with the necessary recording tools, and maintains objectivity as suggested in The Market Research Toolbox. (McQuarrie, 2015) Pikku-Brasilia took a proactive approach by having its own business leaders work directly in customer service during most of the summer shifts. This ensured high-quality data collection, as all observers were genuinely interested in the final results.

The data obtained during the summer from the kiosk’s operations can provide valuable insights into consumer preferences, trends, and potential demand for açai products in the Finnish market, which serves to inform the company’s B2B strategies and decision-making.

In fact, the PB team has been truly analyzing the data they collected and making informed decisions about how to proceed with their business based on the summer observation reports, which effectively served as their market research.

6. CONCLUSION

In this essay we discuss the importance of market research in the business world. It dives more into the process of market research and highlights it practicality and usages. Market research can benefit a business to shape it’s strategy and help understand the market and the client. By using it, companies can save a fortune and be ahead of their competitors. 

To understand market research the essay delved into explaining quantitative and qualitative research methods, to understand the importance of wich method benefits the research better and give an example of those methods. Using a case study of Pikku-Brasilia (a real life business) reader can gain an understanding on how qualitative market research can be done by using in-depth-interviewing, while practising business. Also, how beneficial it is for the business do it repeatedly and how the data can help to improve the business. 

Market research can therefore reduce business risks, enhance decision-making and if used well ensure strategical growth and sustainability of business. With the demonstration of Pikku-Brasilia it shows how market research capitalize on opportunities and helps business to meet the evolving need of their customer.

REFERENCES

Anper Research. 2020. Pros And Cons Of Qualitative Research vs Quantitative Research. Read on 17.10.2023. 

Pros And Cons Of Qualitative Research vs Quantitative Research (anparresearchltd.com)

Branhari Prita. 2020. What Is Quantitative Research? Definition, Uses & Methods. Scribbr. Read on 18.10.2023.

What Is Quantitative Research? | Definition, Uses & Methods (scribbr.com)

Cuafano Gennaro. 2023. What Are The Characteristics Of Quantitative Research? Characteristics Of Quantitative Research In A Nutshell. FourWeekMBA. Read on 17.10.2023.

What Are The Characteristics Of Quantitative Research? Characteristics Of Quantitative Research In A Nutshell – FourWeekMBA

Hague, Paul N, et al. Market Research in Practice : How to Get Greater Insight From Your Market, Kogan Page, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/tampere/detail.action?docID=1412261.

McQuarrie, Edward F. (2015). The Market Research Toolbox: A Concise Guide for Beginners.

Twin, A. 2023. How to do market research, types, and example. Read on 18.10.2023. Published 04.14.2023. https://www.investopedia.com/terms/m/market-research.asp

Wenzel, A. M. (2012). The entrepreneur’s guide to market research. Bloomsbury Publishing USA.