What is market research?
Market research is a systematic process of collecting, analyzing and interpreting information about a target market, consumers, competitors and the industry as a whole. Market research is the foundation of any successful company and it can be used for a number of different purposes – from identifying a new market to launching a new business.
Market research helps entrepreneurs make well-informed decisions, take the guesswork out of innovation and funnel resources into ideas and projects that hold the most potential. Businesses at different stages of growth carry out market research for different reasons. There is a list of ways how businesses can use market research:
- To determine the feasibility of a new business: if market research indicates there’s little or no demand for the product or service, the business is unlikely to succeed.
- To identify and develop potential new markets.
- To keep close tabs on marketing trends and develop strategies on how to stay ahead of the curve or adapt to changing market conditions.
- To test demand for new products or features.
- To determine optimal product placement – how, when and where should a product enter the market.
- To improve and innovate their business – identifying issues with certain business aspects such as customer service early, helps companies overcome costly disruptions later.
- To boost the success of their promotional campaigns. By gauging customer sentiment and understanding how their brand is perceived, businesses can better shape their branding and marketing strategies.
How is market research conducted?
There are two types of market research data: primary information and secondary information.
Primary information is first-hand data gathered from original sources. You either collect the data yourself or hire someone to do it for you, but the bottom line is that you control the process from A to Z.
Secondary information is information and data that has been gathered by others and is publicly available either online or offline. This could be data published in newspapers, reports, journals and so on, or information freely available online. The downside here is that everyone has access to this same information and you have had no control over the collection methods.
The types of information collected through both primary and secondary sources can be either qualitative or quantitative.
Qualitative information helps you gain a better understanding of how people feel about certain topics, what they think and how/why they make choices that they do. The best sources to collect qualitative information include in-depth interviews, focus groups, and direct observations.
Quantitative information is based on statistics and tends to be more structured. Closed question Questionnaires and surveys fall under this type of information.
Sources of primary market research
Although primary research is often more expensive and time-consuming, it is the best way to get the information that your business needs. The most popular primary research tools are:
- Customer surveys. Surveys can be conducted via phone, in person, on paper or using an online survey software like SurveyMonkey. Essentially, it’s a list of questions crafted in a way that gives you the best possible insight into how a customer feels about your product or service, your brand and the experience you provide. It can be as broad or as specific as you want.
- In-depth interviews. Carried out either by phone or face-to-face, in-depth interviews give you an opportunity to ask more probing questions as well as follow-up wherever necessary to obtain satisfactory answers.
- Focus groups. A focus group is an organized session with a small group of people (6-8 individuals) that share a set of common characteristics, such as age, location, buying habits, etc. and participate in a discussion of a predefined topic led by a moderator. It’s an expensive but effective method of getting feedback on bigger scale upgrades, product features or new products.
- Observation. It involves watching or video-recording how consumers interact with a product or service in a natural setting. Although a time-consuming method, it has the advantage of providing unbiased information, as consumers are not under any pressure and are behaving naturally.
Sources of secondary market research
Often referred to as ‘desk research’, secondary market research is best suited for gathering broad insights into market trends and predictions and analyzing the current situation in terms of competition. The most popular secondary research sources are:
- Government reports and studies
- Trade or industry-specific journals, magazines, newspapers
- Television and radio
- Academic papers and educational resources
- Literature reviews
- Online articles and case studies