What is the definition of market research?

Market research is defined as gathering and interpreting market information, which is critical for businesses to understand consumer behaviors, preferences, and trends. This process involves collecting data about the target market, including insights regarding potential customers, competitors, and overall industry dynamics.

By analyzing this information, businesses can make informed decisions about product development, marketing strategies, and overall business plans. The purpose of market research is to reduce risk by providing evidence-based insights that guide strategic decisions.

The other options do not align with the definition of market research. For instance, analyzing employee performance pertains to human resources functions and employee evaluations, while creating advertisements falls under marketing execution rather than research. Estimating production costs is related to financial analysis and operational planning, which are also outside the scope of market research. Thus, the focus on gathering and interpreting market information makes the second choice the correct definition.