Market Research: Primary, Secondary & Product Life Cycle

Market Research: Primary and Secondary

What is market research?

Market research is the process of gathering, analyzing, and producing data relevant to the marketing process, such as the size of the market, key market trends, or characteristics of customers. Market research can identify the reasons for buying a product and customers’ wants. It provides a manager with information for effective decision-making. The objective of market research is to meet consumers’ needs more effectively.

Primary and Secondary Market Research

Primary market research gathers data for the first time for a specific purpose and is conducted face to face with customers. It can be tailored precisely to your own needs but can be expensive and time-consuming. Mistakes include asking too few people or a group that doesn’t represent the whole population. Primary data can be gathered by observation, through surveys, or by test marketing.

Secondary market research uses data that already exists. It is the cheapest and quickest way.

Sampling

The target population is the people you are interested in. As it is impossible to interview all of the people of the target group, it is necessary to take a sample, that is, a group of people that is supposed to represent the overall population.

Product Life Cycle

It is the sales of a product over its life. The typical path for a product can be divided into 5 stages.

1. The Research and Development Stage

The basic idea for the product is developed and tested. This stage can be expensive for a firm. It is a time of high risk, because the product may not be successfully developed. The length of the research and development process will vary from product to product. Some products are modified on a daily basis.

2. Introduction Stage

The product or service is launched and put on sale. Promotion costs will be high to make potential customers aware of the product. Buyers may be reluctant to risk trialing a new product, especially if it is expensive.

3. The Growth Stage

When products become known and accepted by customers, sales should grow. It is easier to get distributors to stock the products, because they will be more confident and willing to stock them. Profits should grow. Make sure you meet the demand, and ensure you are not taking on more staff than needed.

4. Maturity and Saturation Stage

The growth of sales slows down. The product has been in the market for a while, and competitors may have launched similar products. Managers must consider what to do next with the product: should funds be invested to boost sales, or should the product be eliminated?

5. Decline

The sales of any product are likely to fall. It is more difficult to get the product distributed at this stage and you may be forced to cut sales to maintain sales. For example, when the price is reduced to maintain sales.