Careers Business Ownership How Market Observation Is Used to Test Consumer Readiness Share PINTEREST Email Print Jamie Grill/JGI/Getty Images Business Ownership Operations & Success Marketing Sustainable Businesses Supply Chain Management Operations & Technology Market Research Business Law & Taxes Business Insurance Business Finance Accounting Industries Becoming an Owner By Laura Lake Laura Lake Laura Lake is a marketing professional with experience working for agencies and as an independent consultant. Learn about our Editorial Process Updated on 01/25/19 Marketing observation can be confusing to both large scale and small scale business owners. Many of them don’t have the accurate information as far as observation is concerned. In this post, we will clearly distinguish between accurate and misleading information when talking about market observation. Market Observation Observation is a market research technique in which highly trained researchers generally watch how people or consumers behave and interact in the market under natural conditions. It is designed to give precisely detailed and actual information on what consumers do as they interact in a given market niche. What to Consider A bad marketing campaign has dire consequences. That is why it is crucial to do a perfect market observation to achieve the best results that will enable you to survive in the market. You need to consider whether the target market segment is worth anything for the business. Develop a clear conscience of what you want from the observation and whether you need help with the whole process. Observation is meant to open your eyes to greater things. Don’t approach it with a blindfold. Purpose Let’s look at this particular scenario: A highly successful company wants to expand its operations in an entirely new place. It has no idea of anything else about the place except its geographical location and the market volume. The company goes ahead and establishes a branch in high spirits expecting the business to blossom in a few months. However, things soon begin to take a downward spiral which eventually leads to their closure. This company ignored to use a proper market research technique such as observation. Observation is quite vital when preparing for a business expansion. It will help you test the readiness of consumers for your product in a new place. It can also help you prudently choose the distribution channels while creating a large customer base at the same time. Market observation should be done with the purpose of understanding the existing customers. It has to reveal what influences customers’ buying decisions, their values, what they enjoy most and source influence on their buying habits. Observation is meant to set a realistic target for both small scale and large scale businesses. Information such as growth and sales are some of the market elements you should tap into when setting targets. Observation helps solve business problems. It will help you research and work out what the problem is. For example, if you experience a decline in sales, you might discover that there is reduced brand awareness in the market. Types There several types of market observation categorized into six major subdivisions. Disguised observation is conducted without the person knowing.Non-disguised observation is done when the person knows they are being observed.Human observation involves a person doing the observation.Mechanical observation involves using machines such as video cameras and audio recorders.Direct observation involves observing the actual behavior.Indirect observation involves studying a particular occurrence obtained from a secondary source. Market observation should be done by well-trained individuals equipped with the necessary skills in market research. For a better outcome, ensure you have a proper plan laid out in place such as finances required to carry out the activity.