Research is a methodical way of gathering information. Market research is a formalized investigation into the views and opinions of potential customers, performed to determine the present and future prospects for products and services that may be offered within a particular market.

Market research is the process of evaluating markets (which is also called ‘marketing research’). This evaluation usually takes the form of primary research (customer interviews, focus groups, observational research or search for new data sources) or secondary research (reviewing large samples of data that were collected by someone else).

Market Research

Would you like to know why, how, and when to apply market research? Do you want to discover why your consumers are not buying your products? Are you interested in launching a new product, service, or even a new marketing campaign, but you’re not sure what your consumers want?

To answer the questions above, you’ll need help from your consumers. But how will you collect that data? In this case and in many other situations in your business, market research is the way to get all the answers you need.

In this ultimate guide about market research, you’ll find the definition, advantages, types of market research, and some examples that will help you understand this type of research. Don’t forget to download the free ebook available at the end of this guide!

Definition:

Market research is defined as the process of evaluating the feasibility of a new product or service, through research conducted directly with potential consumers. This method allows organizations or businesses to discover their target market, collect and document opinions and make informed decisions.

Market research can be conducted directly by organizations or companies or can be outsourced to agencies which have expertise in this process.

The process of market research can be done through deploying surveys, interacting with a group of people also known as sample, conducting interviews and other similar processes.  

Primary purpose of conducting market research is to understand or examine the market associated with a particular product or service, to decide how the audience will react to a product or service. The information obtained from conducting market research can be used to tailor marketing/ advertising activities or to determine what are the feature priorities/service requirement (if any) of consumers.

Three key objectives of market research

A market research project may usually have 3 different types of objectives.

  1. Administrative: Help a company or business development, through proper planning, organization, and both human and material resources control, and thus satisfy all specific needs within the market, at the right time.
  2. Social: Satisfy customer’s specific needs through a required product or service. The product or service should comply with the requirements and preferences of a customer when it’s consumed.
  3. Economical: Determine the economical degree of success or failure a company can have while being new to the market, or otherwise introducing new products or services, and thus providing certainty to all actions to be implemented.

Why Do Market Research for Your Business

Market research can either make or break your new business. It helps you understand your target customer’s problems and desired solutions so you can create products to fit what they want or need.

Moreover, analyzing your market reduces potential risks because it helps you understand what your business needs to stand out and thrive. Therefore, whether you’re starting a new business or introducing a new product, you will benefit from market analysis.

A common way to use market research data is carrying out a SWOT analysis to determine your business’s strengths, weaknesses, opportunities and threats.

But that’s not the only way you can use it to your advantage. With market research, you can:

  • Determine the size of your target market
  • Test demand for your products and how much customers are willing to pay
  • Understand your competitor’s strengths and weaknesses
  • Identify business performance issues
  • Identify new opportunities
  • Test whether your marketing strategies are effective
  • Keep track of current trends in your industry
  • Ensure optimal brand positioning

Types of Market Research

While there are myriad types of market research available, some standard techniques include focus groups, observation, online surveys and in-depth customer interviews. Your objectives and available budget play a significant role in determining the strategy you should choose for your business.

With that in mind, let’s see how these fit into the established market research methods and what each one entails.

Market Research Methods

The two main ways to gather information and collect actionable data about your products are the primary and secondary research methods.

If you’re unsure which methodology is right for your business, here is a detailed view of each to help you.

Primary Research

Primary research is the process of gathering first-hand information about your target market. You can get this data from varying sources, including focus groups, surveys and questionnaires.

Primary research is an excellent way for small businesses to understand what people think about their brand. It also reveals the actual user experience a customer has with a product or service.

Primary research includes:

  • In-depth interviews: One-on-one discussions to get more insights into a participant’s beliefs on a particular topic or product. They can be face to face, online or over the phone.
  • Observational research: You can opt to observe people quietly in a natural environment to gather critical information. For instance, you can watch how a retail shop handles its customers as they walk in and out of the store.
  • Surveys: Customer surveys are among the most common methods product managers use while conducting a research study.

You obtain survey data by asking questions, so you get to discover people’s opinions, attitudes or perceptions towards a product. You can conduct feedback surveys online, on the phone or by mail.

  • Focus groups: A focus group is a carefully selected group of participants brought together to discuss a topic. This research is ideal when physical interaction with a product or service is necessary to collect data.

You can have them watch a demo, test new products or answer specific research questions.

Secondary Research

Secondary research uses public data and information other people have collected, including reports and market statistics. That might also include your business’s internal sales and marketing records.

Secondary research is beneficial for getting a general view of market trends and customer behavior throughout your product’s launch.

Here are a few common sources for secondary research:

  • Public sources: Government statistics are the most common public sources of market research. The U.S. Census Bureau and Bureau of Labor & Statistics are valuable sources of information if you’re starting a new business. The U.S. Census Bureau business and economy page can help you get population data and understand how much people spend on your target product in specific areas.

For startups looking to minimize costs, these resources are useful. You can also find some of the information in your local library’s business reference section.

  • Internal sources: You can get credible insight from the data your business already has. Your business’s previously collected data, including employee interviews, sales and marketing campaigns data, can help draw conclusions you can turn into decisions.
  • Commercial sources: These are mostly market reports with industry-specific insights compiled by research agencies. You usually have to pay to use and download these.

Is marketing research necessary for your business?

You may still be wondering, “does my business really need to conduct market research?” Answer the following questions to find out:

  • Are you serving a primarily local market?
  • Does the category of business you are starting already exist?
  • Do you have a plan for differentiating yourself from your competition?
  • Do people spend enough on your type of business to support both you and your competition?
  • Do you already know your industry extremely well from prior work experience?

If you answer yes to at least three of these questions, then you can probably get away with less market research. Just know that if you are well-versed in your industry, business-type and competition, that things will always change. It’s wise to be actively researching or establish regular market research sessions to be sure you’re staying ahead of the curve.

Steps for conducting Market Research

Knowing what to do in various situations that arise during the investigation will save the researcher’s time and reduce problems. Today’s successful enterprises use powerful market research survey software that helps them conduct comprehensive research under a unified platform and hence provide actionable insights much faster with fewer problems.

Following are the steps to conduct an effective market research.

Define the Problem

Having a well-defined subject of research will help researchers when they ask questions. These questions should be directed to solve problems and they have to be adapted to the project. Make sure the questions are written clearly and that the respondents understand them. Researchers can conduct a test with a small group to know if the questions are going to know whether the asked questions are understandable and will they be enough to gain insightful results.

Research objectives should be written in a precise way and should include a brief description of the information that is needed and the way in which it will obtain it. They should have an answer to this question “why are we doing the research?”

Learn more: Interview Questions

Define the Sample

To carry out market research, researchers need a representative sample that can be collected using one of the many sampling techniques. A representative sample is a small number of people that reflect, as accurately as possible, a larger group.

  • An organization cannot waste their resources in collecting information from the wrong population. It is important that the population represents characteristics that matter to the researchers and that they need to investigate, are in the chosen sample.
  • Take into account that marketers will always be prone to fall into a bias in the sample because there will always be people who do not answer the survey because they are busy, or answer it incompletely, so researchers may not obtain the required data.
  • Regarding the size of the sample, the larger it is, the more likely it is to be representative of the population. A larger representative sample gives the researcher greater certainty that the people included are the ones they need, and they can possibly reduce bias. Therefore, if they want to avoid inaccuracy in our surveys, they should have representative and balanced samples.
  • Practically all the surveys that are considered in a serious way, are based on a scientific sampling, based on statistical and probability theories.

There are two ways to obtain a representative sample:

  • Probability sampling: In probability sampling, the choice of the sample will be made at random, which guarantees that each member of the population will have the same probability of selection and inclusion in the sample group. Researchers should ensure that they have updated information on the population from which they will draw the sample and survey the majority to establish representativeness.
  • Non-probability sampling: In a non-probability sampling, different types of people are seeking to obtain a more balanced representative sample. Knowing the demographic characteristics of our group will undoubtedly help to limit the profile of the desired sample and define the variables that interest the researchers, such as gender, age, place of residence, etc. By knowing these criteria, before obtaining the information, researchers can have the control to create a representative sample that is efficient for us.

When a sample is not representative, there can be a margin of error. If researchers want to have a representative sample of 100 employees, they should choose a similar number of men and women.

The sample size is very important, but it does not guarantee accuracy. More than size, representativeness is related to the sampling frame, that is, to the list from which people are selected, for example, part of a survey.

If researchers want to continue expanding their knowledge on how to determine the size of the sample consult our guide on sampling here.

Carry out data collection

First, a data collection instrument should be developed. The fact that they do not answer a survey, or answer it incompletely will cause errors in research. The correct collection of data will prevent this.

Analyze the results

Each of the points of the market research process is linked to one another. If all the above is executed well, but there is no accurate analysis of the results, then the decisions made consequently will not be appropriate. In-depth analysis conducted without leaving loose ends will be effective in gaining solutions. Data analysis will be captured in a report, which should also be written clearly so that effective decisions can be made on that basis.

Analyze and interpret the results is to look for a wider meaning to the obtained data. All the previous phases have been developed to arrive at this moment.

How can researchers measure the obtained results? The only quantitative data that will be obtained is age, sex, profession, and number of interviewees because the rest are emotions and experiences that have been transmitted to us by the interlocutors. For this, there is a tool called empathy map that forces us to put ourselves in the place of our clientele with the aim of being able to identify, really, the characteristics that will allow us to make a better adjustment between our products or services and their needs or interests.

When the research has been carefully planned, the hypotheses have been adequately defined and the indicated collection method has been used, the interpretation is usually carried out easily and successfully. What follows after conducting market research?

Learn more: Types of Interviews

Make the Research Report

When presenting the results, researchers should focus on: what do they want to achieve using this research report and while answering this question they should not assume that the structure of the survey is the best way to do the analysis. One of the big mistakes that many researchers make is that they present the reports in the same order of their questions and do not see the potential of storytelling.

Tips to create a market research report

To make good reports, the best analysts give the following advice: follow the inverted pyramid style to present the results, answering at the beginning the essential questions of the business that caused the investigation. Start with the conclusions and give them fundamentals, instead of accumulating evidence. After this researchers can provide details to the readers who have the time and interest.

Make Decisions

An organization or a researcher should never ask “why do market research”, they should just do it!

A market research helps researchers to know a wide range of information, for example,  consumer purchase intentions, or gives feedback about the growth of the target market. They can also discover valuable information that will help in estimating the prices of their product or service and find a point of balance that will benefit them and the consumers.

Take decisions! Act and implement.

Conclusion

Market research is a valuable tool that can be used throughout the plan of action for a company.

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