Seeking information to make wise decisions

The Gods did not reveal, from the beginning, all things to us, but in the course of time through seeking we may learn and know things better.”
 - Xenophanes (Greek Philosopher)

Evolution, as a concept, is just not limited to biology. When we think of how far man has travelled from the ages of stone and subsistence agriculture, we find that the driving forces behind human life and societal evolution have been innovations and improvements in economic efficiency.

Looking back, there definitely has been a long process of evolution of human society. First, the farmer grew crop for his family and then decided it would be better to barter his goods with a neighbour to bring in variety and gains from specialisation. Later, to take advantage of the barter system with more than one person, men collected at one place to exchange commodities grown by them for a number of goods grown by different people. And voila, markets were born!

A close examination of the structure of markets in detail can explain the process of evolution within the functioning of markets as well. There was a time when there was a different market for each geographical unit and market structures changed with the crossing of boundaries. But with the advent of globalisation and commercialisation, we are now moving towards structures dominated by  companies such as Walmart that have a global presence and a homogenous outlet right around the corner of each street. A market is now not just a strong geographical unit but an industry.

With markets going big-scale and requiring investments equivalent to the GDP of some economies, it becomes mandatory for one to look before they leap to sell their products. Before making the fundamental decisions of the right price to charge and the correct quantity to produce, one needs to analyse a number of factors existing in the market.
nWhat does the consumer want?

- Will she be satisfied with my product?
- Will my product be unique in the market?
- Will the consumer be willing to pay a higher price for that uniqueness?
- How will the competitors react?

All these questions and a number of others need to be answered before one decides to venture into the world of markets. However, with the growing size and complexities, answering these questions require organised effort and specialised skills than those that were earlier used.

Birth of market research

Market research is an upcoming branch of research dealing with answering such questions. It includes the systematic effort made by a researcher to discover the needs and wants of the consumer as well as the competitive forces acting within a market. It forms the preliminary base work that almost every firm engages in before launching its product and to gain competitive advantage over the others.   Moreover, given the current scenario, this field of research is growing tremendously to include various sub-forms of research, depending on the various dimensions of the market.

One does research to analyse the demand-supply conditions in the market and to ascertain the possible price for the commodity. Market Segmentation is then created to  segment the market under various categories, which not only include the traditional geographical segmentation but also a whole range of other categories such as demography, personality, gender and many others. To this, one adds the research of trends that include size, changes in tastes, preferences and many more.  A number of tools are available for the researcher and depending on these tools,  there can be various degrees of specialisation in the field of market research. These include customer analysis, competitor analysis, choice modelling, risk analysis and the like.

The world is defined by commercialisation and globalisation. As a result, the need for market research also seems to be evolving — having moved from being an important tool to gaining competitive advantage as a means of survival.

Most firms have a department dedicated to market research. Then there are firms established just for the purpose of conducting market surveys and act as consultants to other firms. With this kind of rapid growth, this sure is a lucrative career option for business or commerce students. A graduate degree including in Economics, Management or Business can provide a young student with the background required for market research.  

To meet the growing demand for quality education, leading global educational institutions are setting up their schools in India. The London School of Economics now offers short-term courses through affiliate centres in India. All one requires is a passion for research as well as an analytical mind to discover new avenues of growth. After all, innovation is the key to evolution.

(The author is faculty at the Indian School of Business and Finance.)