Failing to conduct market research can have dire consequences on the future of your company.
Most startups in general don’t have a marketing research budget since research can be time-consuming and cost a lot. But it’s an excellent idea to research your market whenever you’re entering a new market or launching a new product or trying a product update.
Marketing research enables you to understand your target audience, market conditions and your competition.
If you’re new to data collection, don’t worry.
Here’s an overview of what we’ll cover:
- What Market Research Is
- Types of Market Research
What Market Research Is
Market research is any set of strategies used to collect information about your business’s target audience, customers and buyer personas to establish how viable your product is or would be among them.
Market research can help 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 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 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. For startups looking to minimize costs, these resources are useful.
- 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.