List and define three reasons why companies perform market research.
Companies carry out market research for a variety of reasons. Some of these purposes and types of market research are described below.
Test marketing: This type of market research is done to understand the consumers acceptance of a new product introduced in the market. A market research of this type help to take decision on whether or not a product will be successful in the market, and to identify the specific features of product and the marketing approach substantial impacting the acceptance of product by customers.
Market demand estimation: This kind of research is done to estimate the potential demand for a product an a specific market segment. This type of research is conducted to take decision on developing and introducing a new product in the market. Unless there is sufficient demand for a product for the market, it does not make sense to invest in introducing a new product in the market.
Consumer motivation research: This type of research is done to find out the reasons or motivations behind customer decision to buy a product. Insights collected from such studies can be used in design of products as well as advertising campaigns.
Distribution channel research:This type of channel is used to find out the structure and effectiveness of existing distribution channels for a particular type of product.
Mystery buyer research:In this type of research researchers visit retail stores posing as common customers to study how the store personnel treat the customers.
Advertisement effectiveness research: This type of research is carried out to assess the effectiveness of a company's advertisement program.
Competition research:This type of research is carried out to collect information on various aspects of competitor operations including, product quality, prices, and sales.