Market Research

If you’re looking at starting a new business or expanding your current business into a new area, then market research will certainly be a key part. Market research is a method of gathering and analyzing information, and then interpreting the information about the specific market that is being targeted in order to better market your product or service, or even improve it. This may include information such as basic details about your target market, how your competition is perceived or thought of, and what your target market needs or requires from your product or service. Typically, market research is conducted when one is planning to offer a product or service and specific information is needed about the target market that the business hopes to reach, and thereby gain as customers. This information can be extremely valuable in helping you to present your product or service in the most effective way to reach your future customers.

“If I had six hours to chop down a tree, I’d spend the first four of them sharpening my axe”

The primary reasons for conducting market research are to determine if there is a market and if they will likely purchase the product or service being offered, to uncover why individuals may, or may not, choose your product or service over other similar products or services, to find out about the needs of your prospective customers and what they trust or believe in, and to discover areas where you may need to modify the product or service that you are offering. Basically, market research allows you to see the potential in your business idea from the perspective of your prospective customers, offering a much more objective, realistic, and honest assessment than you could otherwise receive from others, such as those you have an existing relationship with.

First, you will need to understand and determine which criteria you need to research in order to find the data you require.

Market research uses a variety of methods to find out different types of information about the target group of individuals you have identified as becoming potential customers or users of your product or service. You will need to determine which methods are the most feasible for you to conduct and are most likely to provide you with the knowledge and insights that will guide you in how to best market your product or service.

One important factor to be mindful of is that consumers will generally make purchasing decisions based on their feelings, so explaining why your product or service works and why you created it can go a long way towards generating positive feelings about it for potential customers. Explaining how it could benefit the user is also critical so that consumers can visualize how it would improve their life or make something easier for them.

First, you will need to understand and determine which criteria you need to research in order to find the data you require. Below are the main areas of market research that can be used to find out information about a target market. Decide which categories most relate to your product or service and focus on these areas in order to maximize the relevancy of the results that you receive from your market research.

Below are the main areas of market research that can be used to find out information about a target market. Decide which categories most relate to your product or service and focus on these areas in order to maximize the relevancy of the results that you receive from your market research.

Market Size

Market Size measures the amount of potential customers in your specific market for your product or service

Geographic

Geographic measures where your market is located.

Demographic

Demographic looks at different characteristics/ qualities your potential market has. For example Age, Gender, Education Level, Income etc.

Segmentation

Segmentation allows you to split your potential market into different categories normally taking demographic & consumer research into account

Consumer

Looks at the consumer’s needs, wants, behaviour, habits to better apply your market strategy.

Demand

Whether your product will be well received or not. Do people need or want your service or product

Sales

Product

Advertising

What type of advertising would work best

Sale methods

How you would sell your product or service

Competition

Look at the amount of competition your business would have

Once you’ve selected the areas of market research that you need to analyze, you need to figure out how to find the information you need within those specific areas. Market research involves two main types of gathering data, primary research and secondary research. We will explore both types of market research and list the most commonly used methods to gather data for each of them.

Primary Research

Primary research is new research that you conduct, either personally or through a third party, expressly for your business. This method yields information that is specific, reliable, and will be the most up to date. It can take a good deal of time and it may be expensive, but primary research produces the most relevant information that pertains to your business. However, when conducting primary research you should not rely on any one source or method of attaining information as a variety of approaches will yield the most accurate results.

Primary research can be broken down into two main types, quantitative and qualitative. Quantitative research centers on concrete data such as statistics and other figures, whereas qualitative research is more subjective and focuses on the opinions, feelings, and emotions of your target market. Furthermore, there are two types of information that can be found by performing primary market research – exploratory information and specific information. Exploratory information is broad, open-ended, detailed, and may be unorganized. Specific information is more to the point and may answers problems defined in the exploratory stage so you can get a more concrete understanding of what needs to be done.

Some examples of PRIMARY Market research are:

Surveys and questionnaires

By using surveys or questionnaires you can ask your target market to share their feelings or opinions about your product or service. These can be conducted on the internet, such as through email, your website, or social media. It’s important that your questions are carefully crafted and are ingenious enough to result in honest opinions about your business, product or service. Surveys and questionnaires can also be used to discover things about your existing customers, such as their needs, opinions, or to determine how satisfied they are with your product or service.

Trials

Field trials can be conducted by introducing your product in small quantities to retail stores and examining the market trends, customers’ responses, and complaints. It may involve releasing two different versions of your product in order to determine which one is received the best. Necessary price adjustments, better packaging, and other complaints can be rectified before introducing your product on a bigger scale. This is a very effective way to discover the best way to market or produce your product, but it can be time-consuming as well as expensive.

Observation

It’s possible to gain a better understanding of your potential or current customers through observation of how they respond to your business or your product or service. This can be facilitated through the use of website user testing, mystery shopping, or simply observing how people react to your product or service in a natural environment. This might be done through the use of public demonstrations or giving away a free sample and then observing how individuals respond to what you have offered or presented to them. By observing the behaviour of your target market, you have a better chance that the results will be more accurate and reliable than by asking the same people to respond to questions because they may not be entirely honest about how they feel when they are asked directly. When you have the ability to see how people react when they don’t feel any pressure or obligation to cooperate, you can gain real insights into what drives or motivates them as well as what their preferences and needs are.

Focus groups

Focus groups are small groups of people who meet in the same place and have a discussion, led by a researcher, about how they feel about products or services. These are often held in a physical location, but they can also be administered through online or video conferencing. The session may be recorded and the questions are structured in order to gain the specific information that is needed. Focus groups allow you to find out a wide variety of information, to gain information from multiple people at once, and they are interactive and also allow you to observe the behavior of the participants. They do have some negatives as well, such as being challenging to set up and organize and to find qualified researchers to lead the sessions, in addition to being costly to conduct.

Interviews

You can directly question your target market through face-to-face or phone interviews. This gives you the opportunity to further explore or ask additional questions as may be needed about any given point. Interviews offer a more personal way to gain information about your target market and to directly observe their behavior. Face-to-face interviews have some disadvantages however, such as being expensive, getting inaccurate or untruthful responses from participants, and it may take a long time to conduct the interviews. Phone interviews are much less expensive and easier to organize and conduct and they allow you to reach a large or varied demographic area. On the downside, you don’t have the ability to observe body language and the time you have with participants is generally a great deal shorter than with in-person interviews.

Secondary Research

This research involves using data that has already been collected by other parties and will likely be the bulk of what makes up your market research. Secondary research may be available for free or for a reasonable price and can be found by searching online or through sources such as libraries, public documents, customer databases and other sources of information specific to your industry and your target market. This may contain data that you cannot gather yourself. This could be from such sources as the government or other businesses within the industry your researching. These may be either public, commercial, or educational sources. It can be much quicker, and also less expensive, to use secondary research because it’s already done for you, you just need to locate the information.

While there may be many advantages to using secondary research, the data you acquire may not translate well to your target market or give you the exact kind of information that you need. The information may not be specific enough to help you understand the needs of your potential customers or to determine if there is a demand for what you are offering. It can still provide a good foundation for becoming more aware of what is current in your industry as well as learning about your target market so it’s a great place to start. However, it’s important to properly decipher which information specifically applies to your selected target market and is the most relevant in order to get the most beneficial results.

A combination of both primary and secondary research may be ideal, as this will provide a great deal of data but will also minimize the time and expense involved. This will optimize your chances of attaining the most useful and relevant information about your target market while making the most of your limited resources in the process.

Downside/Negatives of Market Research

  • It can be time-consuming as well as expensive, depending on how it is conducted. This is most typical with primary research.
  • The participants in market research who give their opinions in surveys, focus groups, or interviews may not give completely truthful or authentic responses. They may feel that they need to give the “right answer” versus an honest one for example.
  • The information you receive may not be relevant to your target market. This is most likely to occur with secondary research since it cannot be designed to meet your specific needs.
  • You may discover that there isn’t a demand for your product or service, or that modifications are necessary in order for it to appeal to your target market or to meet their needs.
  • Secondary research may produce data that is lacking in quality, completeness, is outdated, or may not be credible. It can also be hard to separate what is relevant to your target market and will help you the most since this usually generates a great deal of data.

Benefits of Market Research

  • Can gain valuable insights about your target market, such as what they value, what their needs are, what their feelings or opinions are about your product or service, how they feel about your competitors and/or their products or services, and what they are willing to spend their money on.
  • Can give you a more realistic view of how your business and your product or service is viewed by your target market, which can be a significant factor in deciding whether or not what you are offering is truly ready to be put on the market.
  • Can greatly help to uncover areas of improvement or things you may need to modify with your product or service.
  • Can help you to discover the strengths and weaknesses of your competitors’ products or services.
  • Can help you determine the most effective price point for your product or service.
  • Primary research can produce information that is very precise and most directly reveals critical facts and details about your target market and it can be crafted in such a way that you can find out exactly what you need to know.
  • Secondary research can help you to find information fairly quickly and without much of a financial investment. This kind of information is generally readily available and may significantly reduce the need for primary research.

Market research is clearly very important for businesses that are starting out, but conducting ongoing market research periodically can also be invaluable for businesses over time. In order to stay current with what your customers  or potential customers need and value, as well as maintaining an accurate assessment of your competition, doing market research can only help you improve your product or service and/or your marketing and promotional efforts.

Conducting market research is one of the best ways to determine the needs of the individuals you hope to gain as supporters and customers of your product or service or your business in general. Every business needs to have a good understanding of their target market or potential customers, as well as the business climate of their industry, otherwise they may fail to get their business off the ground, to make a profit, or to otherwise meet their goals. While there are both advantages and disadvantages to market research, the benefits to your business greatly outweigh any negatives. If you carefully balance the investment of time and financial resources among both primary and secondary forms of market research you can end up with very critical information that will give your business the advantage it needs. Having a good understanding of what people need and what they value significantly helps you to offer the best possible product or service and also achieve the success that you desire. Market research can give you the perspective and knowledge that will help you to make the most of what you have to offer and to spend your time and money wisely as you build your business.