Asking the Right Question to Get the Right Answer in Market Research

BY: REBEKAH MCCARTER

As the world continues to adapt to the changes brought on by COVID-19, many manufacturers have had to diversify product offerings or cease production altogether. As a result, market research has gained more traction and attention as a critical tool in business strategy. In order to get the most value possible out of this powerful research method, companies must have a strong understanding of what exactly they are trying to find. This begins with understanding a few of the key terms used in market research.

One of the biggest challenges when defining a research project is terminology. Often, when discussing project scope, people use “industry” and “market” interchangeably. Most assume these words have nearly identical definitions, therefore it makes sense to use either in any context. However, these terms refer to two very different ideas, as explained below:

• Industry is a broad term referring to a complete supply chain, from design to marketing and selling. The automotive industry, for example, includes the large Original Equipment Manufacturers (OEMs) as well as everything from component manufacturers to final assembly. It also includes all the suppliers that interface with wholesale and retail and contribute to producing and selling the final product. Researching industries will reveal trends and product lines among suppliers.
  • Industry analysis can look at groups of suppliers to evaluate business aspects such as internal and external pressures, changes in technology, regulatory requirements, material sourcing and product differentiation.
• Market refers to individual customers within a sector, where buyers and sellers meet. Keeping with the example above, the automotive market would in some ways include the OEMs, as they are primarily responsible for vehicle designs and platforms. It also would include consumer buying habits, preferences and economic drivers that influence discretionary spending. These groups of customers are heavily influenced by marketing and sales, values, technology and priorities.
  • Market analysis studies trends among customers including demand vs. price, local vs. outsource and flexibility/need of products.

Other market research terms that are commonly used and confused are “sector” and “segment,” as defined below:

• Sector is the broadest classification, grouping together industries and markets. These include sectors such as food, manufacturing, transportation, finance, service and healthcare. For example, the Food Safety Modernization Act (FSMA) is recent legislation that includes multiple rules and guidelines for the food industry, which will have an impact on the sector. The food sector encompasses everything from agriculture to fertilizers, food R&D, production, packaging, distribution and even support industries like finance, insurance and credit.
  • Sector analysis can compare any data element as it impacts size, demographic, pricing, competition, regulations and other aspects across the spectrum of each sector component.
• Segment typically refers to narrow, more tightly defined groups within an industry or market. These are categorized based on characteristics including geography, interest and traits. For example, FSMA impacts various food segments differently. The impact on a bottling facility would be different than the impact on a dairy producer or a frozen food manufacturer.
  • Segment analysis parses out the various research aspects that are unique to the subgroup of companies or customers being analyzed.

Using the correct terms in market research is critical because asking different questions can lead to vastly different answers. Companies must approach a market research project with an idea of what they need to know to get the most useful, relevant data. When applied effectively, market research can point any business in the right direction to stay competitive and prosperous in changing times – as long as they know where to look.

To learn more about how The Center can assist with your company’s market research needs, visit the-center.org or contact inquiry@the-center.org.


MEET OUR EXPERT

Rebekah McCarter, Lead Supplier Scout
Having spent more than 20 years with the Michigan Manufacturing Technology Center, Rebekah views her fundamental responsibility as head cheerleader and advocate on behalf of Michigan’s manufacturing community. Officially, Rebekah is the Lead Supplier Scout for Michigan, part of a national program that effectively identifies domestic suppliers that meet the specifications of OEMs and other U.S. manufacturers, with a special focus on connecting Michigan companies with other Michigan companies. If you are looking to mitigate risk in your supply chain, transition to more local sourcing of raw materials or augment your minority suppliers, The Center can help. 



Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.the-center.org.