Market Research | The Purpose of Market Research Explained | Lego, Gymshark & Apple Examples

Summary

This video delves into the pivotal role of market research, detailing its four key objectives: identifying customer needs, spotting market gaps, mitigating risk, and enhancing decision-making. With real-life examples, it illustrates successful market research by companies like Apple and Lego, and the pitfalls of neglecting it, as seen with LG and Sony's 3D TV failure. It underscores the importance of understanding customer preferences to drive business growth and avoid costly mistakes.

Takeaways

• 📈 The global market research industry's revenue exceeded 73.4 billion U.S. dollars in 2019, highlighting its significance for businesses.
• 🔍 Market research is crucial for businesses to understand their audience, their needs, and what influences their purchasing decisions.
• 💡 Businesses invest varying amounts in market research, from zero budget to millions, to guide their strategic decisions.
• 🚀 Market research helps identify customer needs, which is fundamental for developing products that the market desires.
• 📉 Failure to conduct adequate market research can lead to significant financial losses, as seen with LG and Sony's 3D TV venture.
• 💡 Apple exemplifies effective market research through its Customer Pulse program, leading to strategic product diversification like the iPhone 5c.
• 🔑 Market research can uncover market gaps, providing opportunities for businesses to establish themselves as market leaders in new areas.
• 📉 Blockbuster's failure to capitalize on the market gap in online streaming led to its downfall, while Netflix thrived by filling that gap.
• 💪 Gymshark identified a market gap and grew from a small startup to a global brand valued at over $1.3 billion by 2020.
• 🛡 Market research reduces business risks by providing insights and feedback, which can prevent costly mistakes in product development and market strategy.
• 🔄 Market research informs better business decisions, whether it's launching a new product, modifying an existing one, or choosing a new store location.

Q & A

What was the global revenue of the market research industry in 2019?

The global revenue of the market research industry exceeded 73.4 billion U.S. dollars in 2019.

Why is market research important for businesses?

Market research is important for businesses as it helps them gain a deeper understanding of their audience, their wants and needs, and what influences their purchase decisions and behavior.

What are the four key purposes of market research mentioned in the script?

The four key purposes of market research mentioned are: identifying customer needs, identifying gaps in the market, reducing risk, and making better decisions.

How did Apple use market research to diversify their iPhone product range?

Apple conducted extensive market research through their Customer Pulse program, which helped them identify the needs of customers who wanted an iPhone but did not need the highest spec or want to pay a premium price. This led to the release of the iPhone 5c in 2013.

What was the consequence of LG and Sony not conducting sufficient market research before launching their 3D TVs?

LG and Sony did not conduct sufficient market research before launching their 3D TVs, which resulted in the discontinuation of their 3D TV range as customers did not have a need or want to view TV content in 3D at home.

How did Gymshark identify a gap in the market and use market research to grow their business?

Gymshark's co-founder, Ben Francis, identified a gap in the market for gym clothing that fit slim teenagers, as most were designed for older men with muscle bulk. This insight, along with market research, led to the creation of bodybuilder vests tailored to their target audience, which contributed to Gymshark's growth into a global business valued at over $1.3 billion in 2020.

What is a market gap and how can market research help businesses identify it?

A market gap is a potential demand for a product or service that is not currently being met. Market research can help businesses identify these gaps by analyzing customer needs and behaviors, which can be lucrative if the business can establish itself as a market leader in that gap.

How did Blockbuster's failure to conduct sufficient market research affect their business?

Blockbuster failed to conduct sufficient market research and missed the opportunity to adapt to the online streaming market, which led to their eventual failure as a business. Meanwhile, Netflix took advantage of this gap and grew to a market value higher than Disney.

What is the role of market research in reducing business risk?

Market research helps reduce business risk by providing market insights and feedback from customers. It can help identify potential issues before they become costly mistakes, such as investing in products that the market does not need.

How did Lego use market research to make better decisions and launch a new product range?

Lego conducted a four-year study involving 3,500 girls and their mothers to understand the demand for Lego products aimed at girls. Based on the findings, they launched the 'Friends' product range in 2012, which included changes to brick colors, packaging, and figure sizes to accommodate accessories, leading to a 35% increase in profits.

What are the two main types of market research methods, and how do they differ?

The two main types of market research methods are primary and secondary. Primary market research is conducted or funded by the business and includes methods like questionnaires, focus groups, and interviews. Secondary market research uses existing information, such as internet research, government reports, and market data.