Market research is a crucial point in a business’s journey, whether you’re just starting or you’ve been open for years. Without it, you’ll be essentially going in blind in terms of marketing efforts, product development, customer service, and even business operations as a whole. But what exactly is market research, and how can you conduct your own to gain valuable data-driven insights? Let’s find out.
Defining Market Research
Market research can be defined as gathering and analyzing data relating to a specific market, product or service. When conducting market research, you’ll be collecting information about potential, current or past customers to understand how they behave and what they want within your market. You’ll also be researching your industry competitors to determine what your business needs to offer in order to keep up with the current landscape. When starting an online business, or any business for that matter, market research should be done early on in the process.
Types of Market Research
Within the realm of market research, there’s several different routes you can take to get the data you need. The two main types of market research are primary research and secondary research, which each have their own strategies, goals and purposes.
Primary Market Research
When you compile research data yourself, or hire researchers to gather data for you, that’s primary market research. This method takes more time and funds than secondary research since you’ll be putting resources into conducting custom investigation and analysis – however, this means that it may be more valuable to you than general secondary research.
Within primary market research, there are two main forms of gathering data: exploratory and specific.
Exploratory research is focused on tackling and understanding more qualitative goals, problems, questions and answers. Typically, exploratory research is done first and includes more vague forms of analysis, such as interviews.
Specific research, on the other hand, takes a more quantitative approach to gathering and understanding market data. Researchers, and businesses, typically use specific data to understand and develop determinable business problems or opportunities.
Secondary Market Research
If you conduct market research through data that’s already been compiled and organized by others outside of your control or direction, you’re conducting secondary market research. Since secondary research is less expensive and time-consuming, most of your market research will fall into this category. You can use secondary research to gather comprehensive insights into market trends, helping you to better predict and analyze the state of your industry and existing competition.
How to Conduct Market Research
Now that you understand the different types of market research, it’s time to get to work. Let’s go through the four major steps you need to take in order to gather useful, actionable data for your business through market research.
1. Understand your buyer persona.
Before you begin researching the market, you need to determine the angle at which you need to be approaching your data and goals from. This is where a buyer persona comes in; create a general representation of your business’s ideal customer. Line out what your ideal customer’s age, gender, location, job title, income level, and family size are to better understand their preferences and interests going forward. Without pinpointing your buyer persona, you’ll have no way of knowing who you’re selling to and what they want from you as a business.
2. Establish your research goals.
You’re conducting market research for a reason – but, what is that specific reason? Are you trying to build brand awareness, convert new customers, or keep existing customers? Your goal will determine the type of market research you end up doing, so think about where your goals line up within the following four topics:
- Awareness: You want to let customers, and the industry at large, know that you’re open for business. Conduct PR and advertising research for this goal.
- Targeting: You want to target the right customer segments that will make your business profitable. Work on industry analysis and market segmentation research for this goal.
- Acquisition: You’re looking for ways to convert interested shoppers into buyers. Use concept and usability testing, product optimization, and pricing and advertising research for this goal.
- Retention: You’re focused on keeping customers and convincing them to come back for more. Collect data through customer satisfaction & loyalty research, customer experience insights, and customer communication testing for this goal.
3. Begin gathering primary data.
Once you’re ready to start conducting market research, you should get started with your own primary market research. This is the point at which you’ll be gathering useful and actionable information about your customers, from your customers. The best primary data sources would be:
- Focus groups, typically 6-8 people
- Interviews via phone or in-person
- Surveys via phone, in-person or on paper
- Organic customer observations
Keep in mind that primary research isn’t feasible for every business – if you’re just starting out, you may not have the funds needed to dedicate to this hands-on approach. In this case, it’s a good idea to move on to secondary market research to collect unprompted data from customers and information on your competitors.
4. Identify your competitors with secondary data.
After you’ve collected all of the primary research data that you can, work on understanding the competition you’re facing in your chosen niche through secondary market research. Useful secondary data sources can include:
- Online articles & case studies
- Press releases and advertising materials
- Government reports & studies
- Industry journals, newspapers or magazines
- Academic papers & educational resources
- Literary reviews
Get started by searching on Google and social media to see who you’re competing against in terms of brand awareness and content. Utilize market reports and industry-relevant data to show who the top players are in your market. Investigate online communities within your niche to see what your target customers are talking about. Once you find out who your closest competitors are, analyze what they’re doing; how can you do it better?
There’s a reason why every business plan includes “market research” as one of the earliest, and most important, steps before launching. Your findings will end up commanding your entire business approach and strategy, informing marketing decisions and guiding product development. Without knowledge of what your customers want and what is already available to them, your business is taking a shot in the dark as it enters the market. Through primary and secondary data collection methods, you’ll be better prepared to take on your industry.