IB Business Market Research Explained

How Companies Know You Better Than Your Best Mate (And Why Companies Spend Billions Finding Out)

Right, hands up if you've posted your Spotify Wrapped to Instagram in December. Yeah, thought so. Nearly all of you.

But whilst you're showing off bragging about being someone's top 0.1% listener, Spotify's absolutely rinsing you for free marketing. Every single share is worth thousands in advertising they didn't have to pay for. Did you know this? You are creating free content in the era when content is king.

And it gets better. They're not just getting free ads - they're also collecting mountains of data about when you listen, where you listen, what mood you're in at different times of day, and exactly how long you stay hooked on each track. In 2024 alone, Spotify tracked over 94 billion hours of listening time across their 280 million subscribers. That's a goldmine of behavioural data worth actual billions.

In this entry we are going to approach market research, where companies stalk you to figure out what makes you tick (and more importantly, what makes you spend).

IB Business Management: What Is Market Research?

Let's get the boring definition out of the way first (you'll need this for your exam):

Market research is the systematic process of collecting, collating, analysing, and interpreting data and information about existing and potential consumers, competitors, and markets.

Translation? It's companies doing intensive detective work to figure out what you want, what you are ready to pay for, and how to convince you to buy their offer instead of the competitor's version.

Simple example, imagine you're planning a massive house party. You wouldn't just randomly buy 200 cans of energy drinks and hope for the best, would you? Nah, you'd ask your mates what they're into, check who's actually coming, maybe scope out what drinks went down well at the last party. That's market research, just with lower stakes and less money involved.

Why Do Companies Bother With Market Research?

Launching a product is expensive. Like, properly expensive. And between 40% and 95% of new products completely fail. Remember Google Glass? Those weird futuristic specs that made everyone look like a tech bro villain? Google spent millions developing them, and they flopped harder than your mate's attempt at lifting 100 kg weights after watching one of Anatoly's YouTube videos.

So companies do market research to avoid failure. Specifically, they want to:

1. Figure out what you actually want - not what they think you want. Turns out there's a massive difference between "teenagers might enjoy a coffee-lemonade hybrid drink" (what Starbucks thought) and "teenagers think coffee-lemonade sounds absolutely grim" (what teenagers actually thought when Starbucks launched Mazagran in the 1990s).

2. Work out if you'll actually buy it - Your mates might say "yeah, that's sick" to be polite, but will they drop £50 on it? Different question entirely.

3. Test different price points - Why does Netflix keep fiddling with subscription prices? They're constantly researching how much they can charge before you rage-quit and go back to sharing your ex's account. (They're on top of that too, by the way - the account-sharing crackdown in 2023 was based on research showing most people would grudgingly pay rather than completely lose access.)

4. Spot trends before they explode - Netflix didn't just randomly decide to drop entire seasons at once. They analysed viewing patterns and discovered people loved binge-watching. This insight - gathered from research in 2013 - completely changed how TV works. Now every streaming service does it because Netflix's research proved it worked.

5. Reduce the risk of launching something rubbish - Remember when Colgate tried to sell frozen dinners in 1982? No? That's because it was such a disaster that they buried it faster than you can say "toothpaste lasagne." Market research would've saved them millions by revealing the obvious: nobody wants to eat a meal from their toothpaste company. It's not complicated.

6. Understand different demographics - Not everyone's the same. Your little brother probably doesn't want the same trainers as you. Your nan definitely doesn't want to hear your Spotify Wrapped. Companies need to know who wants what, and that requires proper research into age groups, income levels, locations, and all that.

7. Explain why sales are collapsing - When something's not selling, market research can tell you why. Maybe your Social marketing is dead, maybe your competitor just dropped something better, or maybe your product was rubbish to begin with. Without research, you're just guessing.

Types Of Market Research: Primary vs Secondary Research

There are two main ways companies can do market research, and they're properly different:

Primary Market Research (Field Research)

This is when companies go out and collect brand new data specifically for whatever they're investigating. Imagine doing your own IB Business Management original work rather than copying someone else's homework.

Primary Market Research methods include:

Questionnaires - You know those annoying "Please complete this 2-minute survey" pop-ups? That's primary research. Companies in 2024 are getting wise though - over 61% of surveys are now completed on mobile phones because they've figured out you're more likely to fill them in whilst doom-scrolling Instagram during your lunch break.

Interviews - Proper sit-down chats where they ask you loads of questions about what you think. Can be over video, on the phone, or face-to-face. More personal than questionnaires, but also way more time-consuming (and expensive).

Focus groups - Stick 6-10 people in a room, give them free pizza (maybe), and ask what they think about a product. The idea is that people spark off each other and you get more honest reactions. Though sometimes focus groups get it spectacularly wrong...

Observations - Just watching what people actually do rather than what they say they do. Why? - people lie. Not always deliberately, but if you ask someone "do you eat healthy?" they'll say yes whilst secretly hitting Greggs every lunchtime. Observation catches the truth.

Here's what makes primary research useful:

• It's bespoke - literally made for your specific question

• It's up-to-date - fresh data, not some dusty report from 2018

• It's exclusive - your competitors don't have it

• It gives you detailed insights that generic research can't match

• With online surveys getting easier (and gamified - yes, companies are turning surveys into actual games in 2024 to get better response rates), it's becoming cheaper and faster

But the disadvantages are real:

• Expensive - proper market research can cost thousands, even millions for big companies

• Time-consuming - you need to design the research, collect the data, analyse it... by the time you're done, the market might've changed

• Can be biased - if you write rubbish questions, you get rubbish answers. "Do you love our amazing product?" is a bit different from "Would you consider purchasing this product?"

• Requires expertise - you need to know what sample size is statistically valid, how to avoid bias, how to interpret results. It's not as simple as asking your mates what they think.

Secondary Market Research (Desk Research)

This is using data that already exists - stuff that other people have collected and published. Like using Wikipedia for an essay, except hopefully with better sources.

Sources include:

• Government statistics - Office for National Statistics, census data, trade reports. All free, all online, all potentially useful.

• Industry reports - Proper research firms like Gartner make billions selling detailed market analysis. Though smaller businesses might struggle to afford them.

• Academic journals - Universities publish research on consumer behaviour, market trends, all sorts. Usually solid data.

• Company websites and annual reports - Want to know how Netflix is doing? Read their investor reports. They legally have to tell the truth in those.

• News articles and media - Keep up with what's happening in your industry. If you're selling electric cars, you probably want to know about new battery technology or government policy changes.

• Social media analytics - Platforms now publish trending data, demographic breakdowns, engagement stats. It's a goldmine if you know where to look.

Why secondary research is brilliant:

• Cheap (often free) - Government data? Free. Wikipedia? Free. Most news sites? Free with ads.

• Quick - Google it, download it, job done. Takes minutes rather than months.

• Large sample sizes - Government census? That's millions of people. You're not getting that with your own survey.

• Easy to access - Literally just need Wi-Fi and a laptop

But watch out for:

• It's not tailored to you - that report about "UK teenagers" might not actually represent your specific target audience

• Could be outdated - Markets move fast. Data from 2020 might be completely irrelevant by 2025

• Your competitors have it too - if you can find it, so can they

• Hidden biases - Who funded the research? What agenda might they have? A report funded by a sugar company about "health effects of sugar" might be... slightly dodgy

• Might not actually answer your question - You want to know if 16-year-olds in Manchester would buy your product, but you can only find data about "Northern England youth" generally

Internal vs External Secondary Research

Some textbooks get fancy and split secondary research into internal (your own company's old data, like past sales figures) and external (everyone else's data, like government stats). Just be aware of that if your teacher bangs on about it.

The $140 Billion Industry You Didn't Know Existed

Just so you know, the global market research industry is worth $140 billion as of 2024. That's grown by 37% since 2021. Companies are spending more than ever trying to figure out what you want.

And it's changing fast. In 2024:

• 95% of market researchers now use AI tools (that's jumped from basically zero a few years ago)

• 47% regularly use AI in their research activities

• Mobile surveys have exploded - 61% of all survey responses now come from phones rather than computers

• Gamification is huge - companies are turning surveys into actual games because it gets better response rates and more honest answers

• Real-time data is king - businesses want instant feedback, not reports that take months to compile

The reason? Companies are absolutely desperate for an edge. In markets where dozens of competitors are fighting for your attention (and money), understanding exactly what you want before your rivals do is worth millions.

IB Business Management Real-life Examples: When Market Research Goes Right

Netflix: The Ultimate Research Success Story

Netflix is basically the Dallas Cowboys of market research - they make it look effortless, but there's extreme efficiency behind it.

Netflix Discovery #1: Binge-Watching is Life

Back in 2013, Netflix analysed their viewing data and spotted something interesting. When people had access to multiple episodes, they didn't just watch one. They'd go through 3, 4, 5 episodes in one sitting. Revolutionary? Seems obvious now, but at the time, TV networks released one episode per week and thought that was just how it worked. Netflix market research proved them wrong.

Netflix's research showed different. So they dropped the entire first season of House of Cards at once, and it was an absolute success. Changed the entire industry. Now every streaming service does it because Netflix's research proved it worked. That single decision, based on data analysis, completely reshaped how television works.

Netflix Discovery #2: Localised Content Prints Money

Netflix didn't just shove American shows at the whole world and hope for the best. They did proper market research into different countries and discovered that people actually want to watch content from their own culture, in their own language, with their own references.

So they invested in Squid Game (South Korea), Money Heist (Spain), Sacred Games (India)… and these shows didn't just work in their home countries. They became global phenomena. Squid Game became Netflix's most-watched series ever, and it's in Korean with subtitles. Traditional Hollywood executives thought subtitled shows would never work for American audiences. Netflix's research proved them spectacularly wrong.

Netflix Discovery #3: Personalization is Everything

That algorithm that recommends what to watch? It's analysing your viewing history, how long you watched each show, what time of day you watch, what you paused or skipped, what you rewatched... everything. They've built entire AI systems to predict what you'll like based on your behaviour.

And it works. Netflix's algorithm is so good that 80% of what people watch comes from recommendations rather than browsing. That's billions of hours of engagement driven by research into viewing patterns.

The result? Netflix has 280 million paying subscribers worldwide and made $39 billion in revenue in 2024. Not bad for a company that started by posting DVDs.

Spotify Wrapped: Free Marketing Worth Millions

Remember when we started talking about Spotify Wrapped? That's not just a fun feature - it's probably, unless I am missing something, the most brilliant marketing campaign of the 2020s.

Think about what's happening:

1. Spotify collects data about your listening (which they're doing anyway)

2. They package it into pretty, shareable graphics

3. You voluntarily post it to Instagram, TikTok, Twitter, wherever

4. Your followers see it, remember Spotify exists, maybe check out their own Wrapped

5. Spotify gets millions of social media posts promoting their brand, for free

The 2024 campaign alone generated billions of social media impressions across 184 markets worldwide. That's advertising you can't buy because it's people authentically sharing their own data.

What is so outstanding about this? You want to share it. It doesn't feel like advertising because it's personalised to you. It's your music taste, your stats, your year. The fact that you're promoting Spotify while doing it becomes almost irrelevant.

That's market research at its best - understanding that people love sharing data about themselves, and building a feature that turns that behaviour into viral marketing.

IB Business Management Real-life Examples: When Market Research Goes Wrong

Not all research leads to billions. Sometimes it leads to spectacular, expensive disasters. Let's enjoy some schadenfreude:

New Coke: The $100 Million Mistake

Probably the most famous market research failure in history. In 1985, Coca-Cola was losing market share to Pepsi, partly because Pepsi kept running these "Pepsi Challenge" taste tests where people preferred Pepsi in blind tests.

So Coke developed a sweeter formula - New Coke - and tested it. Their research showed people preferred the taste. Brilliant! They launched it with massive fanfare.

And people hated it.

There were protests. People hoarded old Coke. Some filed lawsuits. Phone lines were ringing off the hook with complaints. Within 79 days, Coca-Cola admitted defeat and brought back the original formula as "Coca-Cola Classic."

What went wrong? The research focused entirely on taste in short "sip tests." But usually when you just take a sip, sweeter always tastes better. When you drink a whole can, sweet can be overpowering. Pepsi was designed to win sip tests specifically - it has a citrusy burst that fades quickly. Coke was designed to be consistently refreshing over a whole drink.

But more importantly, the research completely ignored the emotional connection people had with Coke. It wasn't just about taste - it was about memories, tradition, American identity. You can't measure that in a focus group. The research asked the wrong questions and missed what actually mattered.

Cost? Over $100 million, plus untold reputational damage. Though conspiracy theorists reckon it was intentional to generate publicity. (It wasn't. They genuinely thought New Coke would work.)

Google Glass: When Cool Tech Meets Actual Humans

Google spent years and millions developing Glass - basically smart glasses with a heads-up display. The tech was genuinely impressive. Early reviews from tech journalists were positive.

They launched them in 2013 for $1,500. It didn't work.

Problems:

• Looked ridiculous - made everyone wearing them look like a tech bro stereotype

• Privacy concerns - people could be recording you without you knowing

• Impractical - battery life was rubbish, apps were limited

• No clear purpose - what problem was it actually solving?

• Way too expensive - £1,500 for something that wasn't even that useful?

Google had done loads of technical research and development. What they hadn't done was proper market research into whether the average person would actually want to wear computer glasses in public. Turns out: not really.

The product was killed in 2015. Google lost hundreds of millions. They've since pivoted Glass to enterprise use (factories, warehouses, etc.) where it actually makes sense.

Crystal Pepsi: Clear Doesn't Mean Better

In the 1990s, "clear" products were trendy. Clear malt drinks, clear soap, clear... everything. Pepsi decided to jump on the bandwagon with Crystal Pepsi - completely clear cola that tasted exactly like regular Pepsi.

Their market research showed people were interested in the concept. Initial sales were decent due to curiosity.

But then sales collapsed because:

• It was weird - people expect cola to be brown. Clear cola felt wrong, like something was missing

• No clear benefit - it tasted the same as regular Pepsi but looked weird. Why would anyone switch?

• Marketing was confusing - what was the actual selling point?

The product was pulled after a year. Pepsi lost millions. They brought it back briefly in 2022 as a retro novelty, which worked because it was explicitly playing on the failure rather than trying to be a serious product.

The lesson? Research showed people were interested in the concept. It didn't show they'd actually buy it repeatedly. Interest ≠ sustained purchases.

Ford Edsel: Too Much Research, Not Enough Understanding

In the 1950s, Ford wanted to create the perfect car. So they did extensive market research - surveys, focus groups, demographic analysis, the works. Spent $250 million developing the Edsel (that's about $2.5 billion in today's money).

The research showed people wanted different things - some wanted luxury, some wanted affordability, some wanted performance. Ford's solution? Make 18 different models trying to appeal to everyone.

Result: a confused mess that appealed to no one. The front grille was mocked relentlessly (looked like a toilet seat, apparently). The name was weird. The timing was terrible (launched right as a recession hit). It became synonymous with failure so much that Billy Joel the singer put it in a song.

Ford lost hundreds of millions and discontinued it after three years. The research wasn't wrong - it accurately reflected what different market segments wanted. But Ford didn't know how to use that information effectively. They tried to please everyone and ended up pleasing no one.

Sometimes having too much research and no clear strategy is worse than having no research at all.

Market Research Isn't Perfect

Market research is hard, and even when done properly, it can get things spectacularly wrong.

Why?

People lie (even to themselves) - If you ask someone "would you pay £50 for this?", they'll probably say no. But if you make it trendy enough, suddenly everyone's queuing up. Apple releases £150 headphones and people buy them. Research said they wouldn't.

Focus groups are weird environments - Put someone in a room with strangers and a camera, ask them questions, and you'll get performance rather than truth. The Herman Miller Aeron chair tested terribly in focus groups (people called it "the chair of death" because it looked weird), but became one of the best-selling office chairs ever once people actually used it.

Markets change fast - Your research might be spot-on when you do it, but by the time you develop and launch the product, everything's different. The pandemic absolutely demolished years of market research overnight.

Familiarity bias is real - People tend to hate anything unfamiliar. First reactions to new designs, tastes, concepts are often negative just because they're different. That doesn't mean the product is bad - it might just need some time.

Correlation ≠ causation - Sales went up when you changed your packaging, therefore the packaging caused the increase, right? Maybe. Or maybe your competitor had a scandal that week. Or it was payday. Or the weather was good. Research can show correlations, but figuring out what actually caused something is much harder.

IB Business Management On Point

Despite all these caveats and failures, market research is absolutely essential in business. Here's why:

1. It reduces risk - Not eliminate, just reduce. Even imperfect research is better than launching products based purely on gut feeling. Ford's Edsel failed despite research, but imagine how many disasters Ford avoided because research warned them off terrible ideas.

2. It reveals opportunities - Netflix wouldn't have known about binge-watching without analysing viewer behaviour. They wouldn't have invested in foreign-language content without research showing it could work globally. Research finds opportunities you'd otherwise miss.

3. It explains the past - When something fails, research can tell you why. When something succeeds, research can tell you what worked so you can do it again.

4. It justifies decisions - Try telling your boss "I think we should spend £2 million on this because I've got a good feeling about it." Now try "Research shows 73% of our target demographic would consider purchasing this, and our competitors have successfully launched similar products in adjacent markets." Which one gets approved?

5. It keeps you honest - Without research, businesses believe their own hype. Research provides reality checks. Your product might not be as good as you think it is. Your market might not be as big as you hoped. Better to know now that after you've spent millions.

IB Business Management Exam Corner

When you're writing about market research in exams, remember:

Define it properly - Use the proper definition about "systematic process of collecting, collating, analysing, and interpreting data..." Don't just say "finding stuff out."

Know the difference - Primary = new data collected specifically for your purpose. Secondary = existing data from other sources. That's the core distinction.

Explain advantages AND disadvantages - Don't just write "primary research is good because it's specific." Also mention it's expensive and time-consuming. Examiners love seeing you understand trade-offs.

Use real examples - Mentioning Netflix or Spotify Wrapped will make your answer way more interesting than just theory. Examiners are humans who get bored marking the same generic responses.

Think about context - A small start-up can't afford expensive primary research. A massive corporation like Nike can. What's appropriate depends on the business situation.

Connect to other topics - Market research links to marketing strategies, product development, competitive advantage, etc. Show you see the bigger picture.

Application is key - IB Business Management examiners love seeing you apply theory to real situations. If a question gives you a case study, use it. If it doesn't, bring in your own examples.

The Bottom Line For Your IB Business Management Course

Market research is how companies stop being completely clueless about what you want. When done well (Netflix, Spotify), it creates products you actually love and marketing that doesn't feel like marketing. When done badly (New Coke, Google Glass), it creates expensive disasters that become case studies of exactly what not to do in business.

The industry's worth $140 billion and growing because in competitive markets, understanding your customers better than your rivals do is worth billions. Companies aren't spending that money for fun - they're doing it because research-driven decisions consistently outperform gut feelings.

And next time you post your Spotify Wrapped? Remember you're not only sharing your music stats. You're participating in one of the most successful market research campaigns in history. Spotify knows exactly what they're doing.

You're the product and the marketing team, and you're doing it for Spotify for free. This is perfect marketing.

Stay well,