Knowing the difference is crucial for identifying your market and acting on it
Market research has a limited scope, studying only market and consumer behavior. Marketing research has a wide scope, studying the entire marketing process as well as the market itself.
BY WILLIAM SEIDEL
(Editor’s note: The following is an excerpt from Seidel’s presentation during the USPTO program “Successful Inventing: What Inventors Need to Know,” on May 29. Please see the USPTO website for more about future podcasts.)
Why do you need research?
The point of research is to prevent mistakes and there is one common denominator of failure: bad decisions. You cannot make the right decision with the wrong information.
Research provides usable customer data to determine market size, product price, channels of distribution and much more. Another point is to find market gaps, which are viable business opportunities.
Yet another point is to determine product-market fit—also known as customer acceptance. Without product/market fit, there is no business, no product and no value.
With product/market fit, there are reorders, predictable sales—which means the product is proven. And everyone wants a proven product.
First-stage searching
To sell something people want, you must create something people want before they know they want it.
To do this, you need accurate research. Then, use the research to design products customers want to buy.
What kind of research?
Most people start with a casual search.
Every day, I hear: “There’s nothing like it. It’s not in any stores. My friends like it!”
Searching the internet, visiting store shelves and asking friends is a start. This is secondary market research—which, if done right, may be usable. If done wrong, it is unusable for decisions because it is usually deficient and incomplete.
You need information on which you can act. Not opinions.
A commercial search finds whether your product is currently available, previously available or available in other countries. This is conducted by a marketing research firm to find competitors, similar products, prices and potential markets.
Use patent and trademark searches to see if a patent is available and whether you can avoid existing patents and trademarks.
What market research does
Everything starts with the market, which is all the buyers and sellers in the area or region (the marketplace).
Research can answer these questions with certainty:
- Who is your target customer (the market)? These people may be professionals, construction workers or stay-at-home moms.
- What do you say to them (the message)? What do they need to hear to buy your product?
- How do you reach them (the media)? Do they read The Smithsonian, watch QVC, or shop online?
Search market research profiles of the target customer with demographic data (race/ethnicity, age, education level), household data (income, household size, children) and behavioral data (shopping habits, hobbies, political views).
Market research is a subset of marketing research. It feeds marketing, delving deep into the needs, wants, spending habits and even what magazines people read.
Market research captures useful customer information. Basically, it’s the who, what, when and where of customer information.
It is also the study of the marketplace—market conditions, seasonality, trends, competition and much more. It compares the competition’s strengths and weaknesses and hopefully identifies a market gap.
Bottom line: Market research reduces risks, identifies customer preferences and finds viable business opportunities.
What marketing research does
Marketing research, on the other hand, provides the information to make informed decisions about the best marketing methods to use.
It is the data used to develop the strategy and plan to reach and influence customers to improve performance and profits.
Marketing research includes all product marketing activities, as the marketplace is constantly changing and the research never stops.
It is the “how” to reach customers and why they buy.
It provides data to determine the best media to use to reach the target market, and the best message to influence their purchase decision.
It covers all areas—including the concept, development, placement of a product or service, its growing audience and its branding.
Marketing is the science of understanding customer needs and data, and knowing how to use it. Marketing is also the art of persuasion—changing people’s minds by making the truth fascinating and irrefutable.
Key differences
Market research has a limited scope, studying only market and consumer behavior. Marketing research has a wide scope, studying the entire marketing process as well as the market itself.
Market research is specific to a particular market and cannot be applied to other markets. Marketing research is general and can be used for solving various marketing problems and issues.
Market research is dependent on the requirements and directions from marketing research. Marketing research is independent and developed by the marketing and business decision makers.
The reason marketing is core to any business is, “Marketing knows what customers want!” Hence, don’t argue with the customer.
The purpose of market research is to provide statistically significant data that can feed marketing and help management make informed business decisions. This helps understand the potential markets preferences, opinions and behaviors for a specific product. And it will help determine the potential for customer acceptance.
The purpose of marketing research is to gain insights into the best methods (over 200 marketing methods) and make informed decisions to stay competitive and to manage risk for all marketing activities.
It’s about the effectiveness of reaching and influencing potential customers, using the media mix, the set of actions, strategies and tactics a company uses to commercialize the product and increase the value.
The new-product challenge
The giant problem for inventors is that most companies prefer small improvements to existing products. When it is a new product or an innovative product, there are no customers, no competition, no shelf space and no understanding of the value of the product.
So, finding information for a new product is hard and expensive because if it is new, there is nothing to compare.
If it is a new or innovative product, it requires primary market research—firsthand, targeted customer response to a new product.
A new product or innovative product is high risk, much more expensive to develop from scratch, unproven—and a financial return is unknown. So, determining if it is a viable business opportunity is extremely hard. And investors invest in viable business opportunities, not products!
So, you must do your research to direct product development—to create something people want before they know they want it.