It isn’t enough just to offer a good product. Your mid-size or small business has to sell it to your customer base. Market research is the most powerful tool you can use to accomplish that task. Your services will reach the audiences you intend if you conduct them right. You might even be surprised by the number of sales you reach thanks to thorough market research. So, what is market research, and how should you do it?
Market Research – Your Business’s Path to Success
The process assesses the likelihood your new product or service will reach a wide enough audience to be feasible. It also helps define its target market. Market research involves thorough data collection and documentation of the opinions of the demographic you choose. The end goal is to make informed decisions to include in your marketing plan and marketing strategy.
Some businesses do their own market research. Others choose to outsource this responsible task to marketers that specialize in it. It matters little which option you choose for your business. You do, however, need to have a complete understanding of the market research methods. That way, you’ll be better prepared to interview your target customers. Alternatively, you’ll be in a position to better assess the proficiency of the agency you hire.
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Marketing Research vs. Market Research
Before you delve into the various approaches, you need to grasp the difference between market research and marketing research. They sound similar, don’t they?
When you conduct market research, you gather information and then analyze the quantitative data about that specific market segmentation.
In contrast, marketing research focuses on the so-called Four Ps – product, pricing, place, and promotion. Its main goal is to report on already existing info about various marketing activities. As a result, the report identifies the paths you need to take to solve specific problems before your business.
Let’s say you are running a health food company. The two processes will help you expand your market share in the following ways:
- Market research. You’ll carry out exploratory research and data collection to answer the pressing question: who are the people that might want to adopt a healthier diet? You’ll then search for studies that answer that question. If such studies don’t exist, you’ll carry them out according to scientific standards. The goal would be to get a better grasp of the potential market segmentation. Age, gender, income, and location are some of the factors you’ll have to consider.
- Marketing research. You’ll try to solve problems in direct relation to your marketing strategy. The questionnaires will ask about your labels, package design, and pricing. Furthermore, you can use focus groups to see if your new advertisements are hitting home with your target audience.
In short, market research tells you who the people are that would use your new product. Marketing research, on the other hand, will assist you in gaining a competitive advantage over other companies in the sector.
Primary Market Research
Now that you have a basic idea of what the purpose of the process is, you can dig a little deeper. There are different types of market research to rely on when carrying out your studies. Primary and secondary market research are the two categories you’re going to use the most.
Primary market research is the basis of your efforts. It requires more focus, energy, and expertise than everything else you are about to do. Why? Because it deals with the collection of sets of data no one has gathered before. The three main tools for primary market research are the:
- Market research survey
Secondary Market Research
Gathering data that has been collected already is the basis of this type of research. You collect studies someone else has already conducted to back up your content and theories. Secondary market research involves reading the results of scientific studies, reports from previous market research efforts, and summaries on reliable media outlets.
It’s vital to know there isn’t one type of market research better than the rest. You can achieve optimal results only when you incorporate all existing methods and tools into your efforts. In that way, you’ll be in a position to create a complete picture of the problems your business is facing. The solutions will become apparent as well.
The Methods of Market Research
The interview, the survey, the observation, and the focus group are the four key tools of the trade for the market researcher. Each achieves different goals and is useful in its own right. If you want your market research to be complete, you need to utilize all four. Have in mind that in addition to their benefits, they come with certain pitfalls you’d better know.
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The most insightful of the four tools, the interview is in essence a face-to-face conversation with members of your target audience. You talk to each member individually, which gives you the chance to go deep into the matters at hand. Video conferences are a viable alternative to in-person interviews. They have become particularly useful in the testing COVID times of late. In both cases, the tool will provide you with valuable insights to integrate into your marketing strategy.
What makes the interview so great is that you’ll be in a position to understand the point of view of your ideal customer. They’ll tell you about their hopes, wishes, and needs, which removes the guesswork from the competitive analysis.
The survey is the most basic form of qualitative research, which sociology has used for more than a century. It involves both closed and open-ended questions members of your target audience answer. In the Internet age, e-mail is the most frequent method of conducting surveys. Social media platforms like Facebook and LinkedIn are replacing old-fashioned email in recent years.
You can gain vast amounts of market research data from surveys for cheap. They are easy to carry out, and a lot of the information consists of actionable data. Even when your survey contains a lot of open-ended questions, it’s easy to analyze the results. If you don’t think you possess the skills to do that, a certified market researcher would be an inexpensive expert to hire.
Any market share specialist will tell you observation is the most powerful of the four tools. It is a pretty interesting process to go through as well. The observation consists of direct monitoring of consumer behavior. It happens during “observation sessions”. A person from your organization, or a hired contractor, takes notes while they watch your ideal customer use your new product or service. If they aren’t ready for release yet, you can even use a similar product from a competing company.
Observation has the benefit of being inexpensive. It also doesn’t involve any influence on the consumer on your part. You get the next best thing to watching a client interact with your product during their everyday life. The drawback is you don’t ask questions during observation. To get inside the client’s head, you will need interviews.
After a careful selection, you gather a group of consumers who fit the target audience’s profile. A certified moderator will facilitate a conversation between them about the product and services. They’ll try to figure out details about user experience and the overall impression of the marketing message.
Focus groups are by far the hardest market research tool to utilize. An inexperienced moderator can derail the conversation and fail to gain the necessary information. Trained moderators don’t work for cheap either. Psychological factors like dominance bias and moderator style bias can additionally mess with the results. In any case, the best tip here is to leave the focus group’s work to people who know what they are doing. Unless you have the training and experience, more bad than good will come out of conducting them on your own.
The Good News About Market Research Tools
There is a silver lining to each research technique having both pros and cons. The strong sides of one usually negate the drawbacks of another. For example, the insight from interviews can help you correct your data from the focus groups. Surveys and observations are cheap, which means you won’t have to pay a ton of money for your overall market research. All four complement each other so you can create a thorough picture of your target market segment. Adjusting your marketing strategy afterward isn’t a piece of cake. It doesn’t remain a hard task to accomplish either.
The Steps You Need to Take
The rule of thumb is the leaner the market research methodology, the better. That means you need to prepare carefully for your study if you want to accomplish a SWOT analysis, topic-specific research, or another research study that:
- Isn’t time-consuming
- Doesn’t cost your startup much
- Provides you with actionable information
Using the power of modern technology is crucial. Ecommerce revolutionized the way we do both business and research. You can conduct in-depth interviews and online surveys without a hitch thanks to the Internet. Your market size defines what your research reports look like more than anything. But thanks to the world wide web, you can expand it almost indefinitely. If you haven’t gone digital already, do it.
From there, you’ll need to follow several well-defined steps.
Design a Clear Target Customer Profile
Imagine what type of person would want to purchase your product or service. Look at the demographic data from websites, services, and products, in the same category as yours. Don’t go in too deep with this psychological profile. Seek the answers to the following simple questions:
- Who are your perfect respondents?
- What do they want to gain from your product?
- What is stopping them?
Asking too many questions is far from a good idea at this stage. Remember that the cliché questions such as age, gender, and social background won’t be useful. These differences matter less and less in the modern world, at least according to research.
Carry Out the Observation
If your new product hasn’t hit the shelves yet, you can gather info for similar products. Observational research can happen in two ways:
- You can ask the customers for their permission to watch them interact with the product/service.
- You can do the observation covertly. Just go to the nearest store and watch people test and buy products.
The overt method bears the risk of mudding the results. People become self-conscious when they know someone is watching them. The covert type of observation is possible only for products and services people use regularly.
Prepare for the Interviews
The one-on-one conversations you do with your target customers have infinite potential. However, you’ll need to invest time and effort to prepare for them. Experience, of course, matters, but you should do well if you:
- Forget you are a salesperson, be a journalist instead. Avoid starting with the business slogans and trying to impress the customer with your product. Get to know them the best you can by asking personal questions. Then you can stir the conversation to how your new product/service can help them.
- Be a good listener. The less you talk, the better.
- Asking “Why?” goes a long way. You’ll get a better understanding of consumer behavior and market trends.
- Don’t take notes. Record the sessions either on audio or video.
Leading and loaded questions are the pitfalls to avoid. A leading question reveals your bias toward a certain answer. A loaded question contains an assumption that removes the possibility for an honest answer.
Analyze the Data
The moment you have collected the data from your interviews, observations, surveys, and focus groups is the moment to get down to the real work. The usual pitfall here is people tend to drown in the sea of data they gather. The point of lean market research is to avoid overthinking and produce fast and reliable answers.
Diagrams are your friend:
- The flow model will allow you to see the connections between the different categories of data sets.
- The affinity diagram is perfect for arranging vast quantities of information into actionable groups.
- The consumer journey map shows how a person goes from being a potential customer to becoming a paying customer.
Diagrams provide you with a visual representation of the information you have. As the final step to good market research, they help you sort out the actionable data sets from those you need the least.
The Benefits of Market Research
Marketing research provides you with valuable information about the opportunities before your new products and services. It focuses directly on your customers and helps you understand – their needs, desires, and wishes. With that, you can adjust your marketing strategy to create a favorable forecast about the outcome of your future marketing campaign. Last but not least, marketing research is the way you gain a competitive advantage. You’ll have the data necessary to stay ahead of the competition.
When you start preparing for marketing research, you have three main objectives:
- Financial: You want to know what degree of success you can achieve with your new service or product. On top of that, you would like to learn if there are ways to optimize that success.
- Social: The best products and services satisfy specific consumer needs. By making people happy, they help to make society and the world better. Market research helps you understand the needs and preferences of your potential clients. Then you can adjust the products so that they meet their expectations.
The administrative objective of market research helps you run your company smoother. By knowing what your business targets are you can adjust in-house processes. Proper planning and administration of human and material resources help you optimize your company.
Isn’t Market Research Too Expensive?
The price of market research depends on the market size, the size of your business, and other factors. Whether you do it alone or with the help of an outside contractor matters as well.
Think about the cost-benefit of a potential research project to determine its feasibility. You’re likely to decide you should go with it. Small businesses, mid-size business owners, and large corporations all do market research. The process gives insights into buying habits and enhances the decision-making for businesses of all sizes and types.
Has the process helped you optimize your new business? Did your previous marketing research translate into higher sales numbers? Do you have any insights about the process you’d like to share? Don’t hesitate to tell us in the comments.