In some circles, market research is a catch-all term for asking the industry what it wants. “Do we know what the demand is for this product? Who even seeks our services? Let me do some market research to find out,” you might say.
But what does this really mean?
Here is a simple definition of market research that encompasses all the possible objectives of this practice, in less than 100 words:
Definition of market research
Market research involves looking at the buyers of an industry, what product those buyers want and where they are currently getting it. By engaging the right people and the right data, a business can use this research to position itself in the market and predict where the market will go in the future.
Market research can answer a variety of questions about the state of an industry, but it’s not a crystal ball that marketers can rely on for insight into their customers. Market researchers study several areas of the market and it can take weeks or even months to paint an accurate picture of the trading landscape.
However, researching just one of these areas can make you more intuitive about who your buyers are and how to deliver value that no other company is currently offering them.
You can certainly make judicious calls based on your experience in the industry and your existing customers. However, keep in mind that market research offers benefits beyond these strategies. There are two things to consider:
- Your competitors also have experienced people in the industry and a customer base. It is very possible that your immediate resources are, in many ways, equal to those of your competition’s immediate resources. Seeking a larger sample size for the responses may provide a better advantage.
- Your customers do not represent the attitudes of an entire market. They represent the attitudes of the part of the market that is already attracted to your brand.
Why is market research important?
Market research allows you to gain insight from a larger sample of your target audience, removing biases and assumptions so you can get to the heart of consumer attitudes. As a result, you can make better business decisions by having the big picture.
Here are some examples of information you can take from market research:
- Consumer attitudes on a particular subject, pain, product or brand
- If there is a demand for the business initiatives you invest in
- Where to advertise or sell (geographically or online)
- The needs of unmet or underserved customers that can be turned into a sales opportunity
- Attitudes regarding the pricing of a particular product or service
Getting answers to these questions based on real data can help you make good business decisions and minimize risk.
Types of market research
To give you an idea of the scale of market research, consider that it can be qualitative or quantitative in the wild – depending on what studies you do and what you are trying to learn about your industry. Qualitative research looks at public opinion and explores what the market thinks about products currently available in that market. Quantitative research looks at data and looks for relevant trends in information gathered from public documents.
Let’s talk about four different types of market research you can do, a potential goal for everyone, and how these studies help you better understand your market.
Interviews are the personal and one-on-one conversations you can have with buyers in your industry. You can conduct interviews in person or over the phone.
Your contacts can answer questions about them to help you design your buyer personas. These buyer personas describe your ideal client’s age, family size, budget, job title, challenges they face at work, and similar aspects of their lifestyle. Having that buyer profile in hand can shape your entire marketing strategy, from the features you add to your product to the content you post on your website.
Focus groups are similar to interviews, but in this case you are bringing together a large group of people for a sharing interview. A focus group is made up of people who have at least one element of your buyer personality in common – age or job title, for example.
This type of market research can give you ideas for product differentiation or the qualities of your product that make it unique in the market. Consider asking your focus group questions about (and showing them examples of) your services, and ultimately use the group’s feedback to improve those services.
Surveys are a form of quantitative research and you can distribute them by phone, email, or through an online survey. A survey can be for people who have downloaded content from your website or who have interacted with someone in your business.
Having enough surveys can help you determine your level of customer satisfaction. This indicates how satisfied your customers are with what you are selling to them. You can include questions such as “How well did we solve your problem?” and “Would you recommend our product to a friend?”
Interviews, focus groups and surveys are all primary data sources. Secondary data, on the other hand, is the public information – online and offline – that characterizes your industry. This includes competitor websites, social media business pages, trade magazines, market reports, and even census data released by the government.
If you look at enough secondary data, you can see how well your brand awareness is in the market compared to companies that provide the same product or service as you.
The market research that you do does not have to include all of the sources of information described above. The data you collect will depend on your business needs and what might interest you most at the moment.
Editor’s Note: This article was originally published in July 2018 and has been updated for completeness.