Market research is a major part of almost all international companies, including Microsoft, Amazon, and Apple. Why is this important? They can use market research to quickly grasp all information and adapt to changing environments. They can therefore succeed and remain ahead of their competition.
To reach your goals, market research is essential if you plan to enter new markets, launch a product or improve your offerings.
What is market research?
Market research, in its simplest form, is the process of gathering, analyzing, and interpreting data to better understand the market for a product or service.
Market intelligence is a way to identify the needs, characteristics, spending habits, and purchasing behavior of potential customers. Potential and existing customers. These insights can be used to assess the viability and appeal of the product/service among these customers.
To ensure the launch of a new product/service and its steady growth, market studies analyze and generate data about competitors.
Companies conduct various market research. These are the most popular:
- Brand Research
- Campaign Effectiveness
- Competitive Analysis
- Consumer Insights
- Customer Satisfaction Research
- Customer Segmentation Research
- Product Development
For different reasons, businesses conduct market analysis. These studies enable companies to make better-informed and more insightful decisions. The firm can’t develop crucial strategies like market segmentation and product differentiation without proper market research.
The market information provides superior information that allows the enterprise to create better offerings, improve the user experience and send appealing marketing messages to prospects. The business will be able to increase its customer base, conversion rate, and revenue.
The company can use industry transformations, customer preferences and changing needs to understand and capture trends in legal, economic and regulatory factors to help it decide where to invest its resources.
Market research is a key component of ensuring that a business has efficient and effective operations. It also helps to maintain a sustainable growth speed.
Either the company conducts market research themselves or uses a third-party agency that specializes in this type. Three of the most prominent market research companies are Gartner Inc. (IQVA), Nielsen Company (Nielsen Company).
Different types of market research
Primary research tools
Primary research is the process of gathering first-hand information. It is possible for the company to compile this information or hire a third-party. This type of analysis allows the company to manage the entire process from A through Z.
Primary research usually begins with exploratory research, and then moves on to specific research. Unstructured interviews are used to collect a lot of data. It is important to pinpoint a problem or opportunity. Once the company has identified the most important market problem, they ask specific questions through structured and formal surveys. This is done to find solutions to the problem. These solutions could include a new feature, or a new product.
Although primary research can be time-consuming and costly, it can still provide valuable insights and new information. These tools can be used for primary research.
These are cost-effective and affordable ways to do primary research. There are many types of surveys. You can choose to give feedback on a simple card or complete a lengthy survey. You can send surveys directly to the respondent’s mailbox or fill out online questionnaires.
A survey is a great way to increase the response rate.
- Keep it short and simple.
- Address specific people
- Appeal to the respondent
- It should be well-designed for all devices, including tablets, smartphones, and laptops.
- Include a professionally-prepared cover letter to explain the reason behind the questionnaire
- Reward respondents with a gift or discount
Online survey software such as MonkeySurvey or HubSpot, Typeform and Typeform can be used. to create your survey or questionnaire.
Focus groups are used frequently to conduct qualitative, exploratory research. This research method is a great way to get insights into customer preferences or market trends.
Focus groups are small groups of people with similar characteristics that fit into a target demographic. Then, they ask them open-ended questions to help in achieving the research goal. The focus group usually consists of 8-12 people.
Participants discuss a predetermined topic. A moderator is usually present to guide and stimulate the discussion among participants in order to gain more detailed insights.
These group interviews can be conducted in person or via video conferencing. Researchers take notes on the discussions without interrupting the participants.
Interviews with people
Interviews are one of the most cost-effective methods of market research. Interviews can be conducted by phone or face-to-face. Interviews in-depth allow respondents to discuss their preferred topics with only limited questions.
Interviews can include detailed questions or free-flowing conversations between the researcher, respondent and subject. This type of research helps to understand the psychological motivations and perceptions of consumers.
Researchers need to have the right skills and experience in order to conduct successful interviews. The interview script should be memorized and the researchers should know how to use it. Interviewees should feel comfortable sharing their thoughts and refrain from pauses. This will make them lose interest quickly.
This is the process of collecting information by recording or watching consumers interact with products or services in a natural setting. Although it takes a lot of time, this method can be very useful for providing objective research.
Observed people and researchers rarely communicate directly. Observational research is a great way to capture the customer’s behavior. These insights are more reliable and can be applied immediately.
The following steps should be followed when using an observational approach for market research:
- Identify the target participants. Determine what to observe.
- Choose the recording mode
- Create the questionnaire and then make notes.
- Analyze the behavior to draw inferential statistics
Secondary research sources
Secondary research is also known as “desk research” and involves reviewing, re-analyzing, and reinterpreting existing information to fit your current situation. Secondary information can include trend reports, market statistics and sales data.
Secondary data can be accessed online or offline. There are tons of studies available online. Search engines require you to enter keywords and phrases. Information can also be obtained from trade journals, industry publications, and newspapers. Private organizations might charge extra fees or require permission to access certain resources.
Secondary research generally costs less than primary research because it takes less time to complete and is cheaper. However, the downside is that you are not able to control the process and the results might not be tailored to your needs.
Desk research should be considered by businesses as a starting point for market research. It is important to verify the publication date of any information you use to ensure it is current.
There are two major categories of secondary research sources: internal and external.
These reports and studies can be internal sources. They include balance sheets, profit & loss statements, inventory records or sales figures.
These information sources can be used to identify market trends and evaluate the company’s capabilities.
The cheapest, most accessible and most cost-effective way to get a lot of useful information from internal sources is through the internet. Internal data is unique to the company. It is not available to any other competitor.
Data from outside organizations and people are called external sources. External sources often provide complete data. These sources can be used if your internal data is insufficient.
There are many external sources. There are endless data sources. To avoid collecting unneeded data, it is important to use these sources in a controlled and restricted manner.
These are the most widely used sources of data from external sources.
- Reports and studies from the government
- Trade journals, magazines, newspapers
- Radio and television
- Educational papers and resources
- Literature reviews
- Online articles and case studies
- Materials and websites of competitors
Both primary and secondary market research approaches have their advantages and disadvantages. Although primary research is more accurate, timely, and provides new data that’s specific to your needs, it can be costly and time-consuming. Secondary research is less expensive, takes less time and money, but may not be the right fit for your needs.
Before you can decide which type of research to do, it is important to first consider your goals, budget, and available resources.
What is the purpose of market research?
You must first find out what your customers want and need in order to ensure your business’s success. Next, you must determine how to make your customers happy in a more profitable manner than your competitors.
Without market research, it is difficult to achieve this. Market research is often viewed as expensive and complex, but they are often ineffective and impossible to do. This assumption can lead to costly mistakes down the line.
Many startups fail in their first steps because they assume they know their customers well enough to ask them.
It is crucial to conduct thorough market research in order to keep businesses competitive in this constantly changing environment. More studies will lead to better decisions.
We will be highlighting the key benefits of market research in this article.
Understanding existing and potential customers
You can gain valuable insight from your customers by conducting market research. To create targeted marketing strategies, you can identify potential customers and their key demographics.
Market studies can also help you understand the behavior of your customers and how they interact with your products. This will help you to improve your customer satisfaction and identify upsell or cross-sell opportunities.
Keep an eye on competitors
Competitor analysis can help you identify the strengths and weaknesses of your competitors. It is crucial to understand your competitors’ strategies for capturing customers. You are in the same market with your competitors so if you don’t increase your market share they will. You can also learn the weaknesses of your competitors to increase your customer base.
You should look at their products and services as well as marketing strategies and campaigns. Visit their online and offline stores, look at their ads, and read their blogs. You will be able to compete if you learn as much as possible.
Find new opportunities
Market studies can help the company identify unmet or under-served markets that could be profitable to enter. You are able to not only assess the market situation but also predict future changes. You can make the right adjustments to stay ahead of the curve by capturing market trends.
It is clear that giants such as Blockbuster and Nokia failed to keep up with the times and ended up bankrupt. Netflix and Apple continue to succeed by conducting thorough market research before all other competitors. This allows them to exploit every opportunity.
Lower risk factors
Business risks refer to factors that could result in lower revenues and profits or financial losses. Entrepreneurs face business risks every day. Market frustration, inflation, deflation, geopolitics, etc. These are all common business risks.
Business risk is an increasing concern in today’s economy. Companies must evaluate and minimize the risk of business failure by using accurate and current information. It is a good idea to invest a small portion of your budget on market research and testing. This will help reduce the risk.
Ensure sustainable growth
In-depth market research helps you to understand your customers and competitors. This allows you to identify more business opportunities and lower your business risk. These benefits ensure that your business continues to grow.
Market research is crucial to reach your target market, whether you’re starting a business, launching new products, or introducing a new feature.
Market research is essential for both small and large businesses. Market research is available to all companies, regardless of industry.
6 Steps to do market research
While we all know the importance of conducting market research, it is even more important to do it correctly. Here are some important steps to follow when conducting market research.
Step 1: Identify the problem
Market research begins with defining the problem. It is important to know what you want to study so that you can determine the best way to gather and manage this information.
It could be about increasing market share, growing customer base, or launching a new product. To guide the next steps, research objectives must be clearly defined.
Step 2: Define your sample
You cannot manage your market surveys for everyone. If you don’t target the right participants, your surveys will be meaningless. As a researcher, it is important to select a representative sample that accurately reflects the characteristics of the larger group.
To create a relatively accurate sample, you have to identify your buyer persona.You need to consider the following essential characteristics:
- Position titles
- Family size
- Major challenges
Step 3: Prepare research questions
You have a limited amount of time that respondents will give you. This time must be used wisely. You must always ask intelligent questions, regardless of whether you are conducting market research via an online survey or a personal interview. Your questions should be clear and can address all relevant masters.
Researchers should also prepare a discussion guide for interviews or focus groups. This will make it easier to have a smooth conversation.
Step 4: Collect data
Data collected in market research can be either quantitative or qualitative. In order to be successful in market research, you will need to have both quantitative and qualitative data. It is important to ensure that the data you are using is accurate and reliable.
Step 5: Analyze, interpret and summarize data
After you have collected enough data, it is time to do an in-depth analysis. It is important to search for a wider meaning than just a few pieces of information. You must avoid making assumptions about the data when you analyze it.
A report is used to present data analysis. It is important to clearly write the report so that recommendations can be made.
Step 6: Turn your research into action
The results of your research will help you answer the problem. You can now begin to develop your marketing strategies and campaigns based on the research results.
The business environment is constantly changing. Market research should be done on a regular basis. Your business will have greater success if you know your customers and the whole market.
Avoid these common mistakes
Only use secondary research
You cannot solve your particular problems if you rely only on secondary data. Although secondary research is a great place to start, it is not enough. Secondary research can also be outdated.
It’s worth your time and effort to conduct your own research, interviews, or observations in order to gain valuable insights.
Using unreliable sources
There is always a chance of incorrect data when you use the Internet to gather information. You can use more reliable resources such as the library, college campuses, and specialized research companies to do better research with a limited budget.
Only survey the people you know
Sometimes, small business owners conduct research on family members and colleagues. These people are not suitable for survey subjects. You need to get accurate and beneficial insights from your ideal customers. To avoid bias, you should use a cross-sectional sample of respondents.
The bottom line
Market research is an essential component of any business’s success. Market research gives you the ability to gain valuable insights into your market, competitors, as well as the whole market. These valuable insights will help you make better business decisions and increase your chances of success.