Market research is the first step to ensure that there are a market and a necessity for a product or service. A comprehensive understanding of the target audience, the specific market, and the motivations behind consumer behaviour and buying decisions will help companies to design better products and develop more apt marketing strategies. The chances of success are much higher when companies have a deep understanding of what the market and customers demands are and deliver the right expectations to meet these demands. Market research is also a pathway to analyse the competitors in the marketplace and understand their performance and strategies.
What is market research?
Market research is a complex set of techniques that are used together, study, and analyse information about a market’s potential and prospective customers to gain important insights. Traditional research methods included focus groups and surveys, however, newer tools like social media analytics, sales data, public domain data and more have expanded the scope of the research field.
Most businesses skip over the research part thinking that it’s an unnecessary expense. But, failure to conduct important background research results in product failure and ineffective marketing strategies. Insights are crucial to improve user experience and customer satisfaction.
There are two types of market research- primary and secondary.
- Primary research- Primary research is self-conducted research by companies to gather vital information through focus groups or surveys. This first-hand account information plays a critical role in establishing audience segmentation and buyer personas. Primary research can either be exploratory or specific. Exploratory research is a preliminary stage of research conducted to study a potential problem. Specific research is performed post exploratory research to find solutions for problems or issues already identified by the business and designated as important.
- Secondary research- Secondary research is information collected by other parties. This includes studies conducted by researchers or financial data compiled by other organisations. This widely available data, free or paid, is helpful in analysing competitors. Secondary research can be categorised into public, commercial, or internal sources. Public sources include government statistics that provide information on different industries. Commercial sources include information or research conducted by agencies like Gartner, Pew, and Forrester. Commercial source data are typically paid for the information that is accessible to companies. Internal sources are the information that organisations already possess.
Why is market research important?
Market research offers valuable insights into different matters that allow companies to have a bird’s eye view of their problems.
- Market research can help organisations understand the customers, their behaviour, their pain points, and their motivations.
- Market research can help organisations improve their user experience.
- In-depth research removes the guesswork from the equation. This helps to create more optimised strategies that deliver the desired results.
- Market research is a cost-effective way to gather important insight and implement successful marketing.
- It also helps organisations to understand their competitors better.
What are the different market research methods?
- Focus groups- Focus groups are organised by bringing together a carefully selected group of people who fits the buyer personas of the target market. In focus groups, a trained moderator leads a conversation surrounding the product, user experience, and/or marketing message to gain deeper insights. A focus group can go off on tangents the organizer could not have predicted. This can lead to good outcomes where miscellaneous topics are brought up or it could lead to a bad outcome where the discussion diverts from the actual answers the moderators are seeking. A balanced discussion is key to get unbiased feedback.
- Surveys- In survey research, questions are given to respondents in the form of email, phone conversation, in person, or online form. These questions can be close-ended or open-ended. Surveys proved to be the most commonly used market research technique because they are inexpensive to conduct and significant amounts of data can be collected rapidly. A successful survey must contain good questions that provide good analysis.
- Interviews- Interviews allow one-on-one conversations with the target audience. This is an insightful process to get a deep understanding of the prospective customer. Interviews allow intimate communication and clarification with respondents, making it good for open-ended questions. Furthermore, interviews enable the interviewer to go beyond surface-level responses and investigate deeper.
- Observation- Observational market research is a qualitative research method where the researcher observes their subjects in a natural or controlled environment. Observation is a great alternative to focus groups. It’s less expensive and also it allows moderators to observe people interact with the given product in a natural setting without influencing each other.
- Competitive analysis- Competitive analysis is a highly strategic form of market research where the researcher analyses their company’s competitors thoroughly. Competitive analyses are valuable because they give a deeper understanding of the competition in the relevant market and industry. The competitive analysis starts by defining the product, service, or brand, and market segment. Companies conduct a SWOT analysis to assess the competitor’s strengths, weaknesses, opportunities, and threats.
- Buy research- There are plenty of research institutes that collect extensive data and their research data is available to companies for a price. These institutes offer a litany of reports for purchase, mostly with the option of a single user license or a subscription. This can help companies to save time or effort to conduct their own research.
How to conduct market research?
- Define the buyer persona- The first step to conduct market research is to create simple buyer personas. Companies can use on-page or emailed surveys and interviews to understand the target users. Companies need to use interview questions to understand three parameters- who they are, what is their main goal, and what is their primary barrier to achieving goals.
- Identify a group to engage- The group selected for market research must be similar to the company’s target audience. The group should be a representative sample of the target customers so that marketers can better understand their actual characteristics, challenges, and buying habits.
- Prepare an extensive questionnaire for the participants- Companies should always create a discussion guide for their focus group, online survey, or interviews to make sure that they cover all of the top-of-mind questions and use their time wisely.
- Analyse competitors- It’s always important to scrutinise every competitor in the market. A comprehensive understanding of the competitor can save organisations time and money by helping them realise what strategies to follow and what to avoid.
Market Research must be the backbone of every business’s product development process and marketing plan. Market research allows companies to test the viability of their products or services. Without proper data to validate consumer interest, there is a greater risk of failure. Through market research, organisations have an opportunity to understand if there is an audience for their product and what can be done to improve the product or service.