Find out how market research could help you with actionable insights into consumer behaviour, industry trends, and the competitive landscape. You will be able to develop a data-driven business strategy that enables you to communicate effectively to the target audience and outperform your rivals using various research methods at your disposal.
Market research is a systematic approach to information gathering, analysis, and interpretation. Any business's foundation is built on the data that they have to make better decisions. The data could be about a new target market, buyers, competitors and the viability of the business. The research can be used for various things, from finding a new market to starting a new business.
Entrepreneurs benefit from market research when making well-informed decisions. They can direct resources toward projects and ideas with the most significant potential and eliminate the guesswork associated with innovation. Businesses at various growth stages carry out market research for multiple reasons. There is a list of applications for market research by companies:
- Find out if starting a new business is possible. The company is unlikely to succeed if market research reveals little or no demand for the product or service.
- Identify and develop new market opportunities.
- Develop strategies for staying ahead of the competition or adapting to shifting market conditions by closely monitoring marketing trends.
- Examine the demand for new features or products.
- Optimal product placement—how and when a product should enter the market must be ensured.
- Enhance and innovate their company. Certain aspects of your business, like customer service, can be identified early. Later, this may assist businesses in overcoming churn and having a more significant lifetime value of customers.
- Enhance the effectiveness of their advertising campaigns.
- Businesses can better shape their branding and marketing strategies by analysing customer sentiment and brand perception.
Market research is essential for businesses looking to gain an advantage in today's fast-paced and highly competitive business environment. You can learn much about consumer behaviour, industry trends, and the competitive landscape with the proper research methods. These insights can help you develop a winning business strategy.
In this comprehensive guide, we'll go over the main features and benefits of market research, as well as the many different research methods you can use.
Although market research can answer various inquiries regarding the state of an industry, it is not a crystal ball on which marketers can rely for insights regarding their customers. It can take market researchers weeks to get an accurate picture of the business landscape because they look at multiple parts of the market.
However, researching just one of those areas can help you better understand your customers and how to provide them with the value that no other business is currently offering. Indeed, you can make sound decisions based on your industry experience and existing clients. However, market research has advantages that go beyond those strategies. There are two interesting points:
- Your rivals also have a customer base and industry professionals with experience. Your primary resources and those of your competitors may be nearly identical in many ways. An advantage can be gained by seeking answers from a larger sample size.
- Your customers are not representative of the market as a whole. They convey the attitudes of the market segment already interested in your brand.
A strong interest in market research is evident from the market's rapid growth in market research services. At a 5% compound annual growth rate, the market is expected to grow from $75 billion in 2021 to $90.79 billion in 2025.
Through market research, you can meet your customers where they are. This proves invaluable as our world, digital and analogue alike, becomes increasingly louder and demands more and more of our attention. You can effectively craft your product or service to naturally appeal to your buyer by comprehending their problems, pain points, and desired solutions.
Additionally, market research provides insight into a wide range of factors that affect your bottom line, such as:
- Where do your target audience and current customers conduct product or service research?
- Which of your competitors does your target audience look to for information, options, or purchases?
- What's trending in your industry and the eyes of your buyer?
- Who makes up your market, and what are their challenges?
- What influences purchases and conversions among your target audience?
Ultimately, market research lets you get information from a more significant portion of your target audience, so you can get to the heart of consumer attitudes and eliminate bias and assumptions. Knowing the bigger picture helps you make better business decisions.
Markets and customers are constantly evolving, so staying informed is critical.
Market research takes a lot of time and resources. When carrying out your research studies, you will need to be strategic.
- Before investing in new businesses or ventures, it is essential to conduct initial market research. It will assist you in locating rival products, pricing structures, and marketing strategies.
- Understanding your potential customers in new markets is essential. Cultural values, emerging trends, and economic shifts vary from location to location. You can save money by doing market research.
- You will introduce new products and/or services as your business expands. Before making any significant changes, it is essential to comprehend the market conditions.
When doing market research, you might hear the terms "primary research" and "secondary research". Think of these as two different types of research that fall under the more significant aspect of market research.
Primary research is when you conduct the research yourself, such as surveys, focus groups, or interviews. Secondary research, on the other hand, involves using existing research and data, such as reports or statistics from government agencies, trade associations, or other organisations. While some marketers like to differentiate between primary and secondary research, it's only sometimes necessary. The most important thing is understanding what kind of research you need to do and how to do it.
In the following sections, we'll explore the different types of market research that fall under both primary and secondary research.
Primary research entails gathering information directly from customers and the market. It helps create buyer personas and segment your market. Open-ended interviews or surveys with small groups of people are used in exploratory primary research, which focuses on potential issues or opportunities. Specific primary research aims to investigate problems or opportunities that the company has already identified and focuses on a smaller, more specific audience. Exploratory and specialised research are the two categories into which primary market research typically falls.
Exploratory Research: Primary market research focuses more on possible issues that might be worthwhile to address as a group than on quantifiable consumer trends. Before any detailed analysis has been done, it often occurs as a first phase and may include open-ended interviews or surveys with small groups of individuals.
Specific Research: After exploratory research, detailed primary market research is frequently conducted to delve deeper into problems or possibilities the organisation has previously recognised as crucial. The company can do a focused study by selecting a more limited or focused audience group and posing questions to address a potential issue.
In contrast, secondary research involves concluding existing data and public records. Trend reports, market statistics, industry content, and an organisation's sales data are all included. When looking at competitors, secondary research is beneficial. For secondary research, there are three main categories of sources:
1. Commercial sources - Research organisations like Pew, Gartner, or Forrester compile commercial sources, which typically demand a fee
2. Internal sources - A company's existing market data, such as customer retention rates and sales history, are known as internal sources.
3. Public sources - The most accessible and frequently free sources are public sources. Government statistics like those provided by the Bureau of Labor & Statistics and the U.S. Census Bureau are examples of public sources.
A company can comprehensively understand their market and make informed decisions by combining primary and secondary research.
Quantitative - Data produced using numbers. It consists of website visitors, poll results, and social media followers. Charts and graphs may be created with this type of data.
Qualitative - Information not tallied or evaluated, such as inclinations, disapprovals, and emotional states. Data that is qualitative is often generated via focus group discussions and interviews. Indeed, you wouldn't apply a formula or method to draw assumptions from this sort of data.
2. Focus Groups
3. Research for Buyer Persona
4. Research for Product/Service
5. Research Based on Observation
6. Research for Pricing
7. Demographic groups and Market Dynamics
8. Comparative Evaluation
10. Research on Customer Loyalty and Satisfaction
11. Campaign Analysis
Interviews enable in-person and virtual face-to-face communication, enabling you to allow for a smooth movement of dialogue and observe your interviewee's mannerisms as you go.
Before interviews, list questions about the information you need to help you research better, like your customer's pain points, objectives, purchase behaviour and brand awareness.
Focus groups offer the opportunity to select a small group of individuals who can assess your product, view a demonstration, give their opinions, or respond to targeted inquiries. By conducting this form of market research, you may obtain insight into ways to distinguish your product, such as its distinctive characteristics in the market. You can query your focus group about your offerings and present them with samples, utilising their input to enhance your services.
You can better understand your consumers (and potential customers) using buyer personas. You can adapt your content, message, product development, and services to fit the unique demands, habits, and concerns of the people who make up your target audience.
Buyer persona research offers an accurate perspective of your target market's makeup, issues, reasons for wanting your product or service, needs for your company or brand, and much more.
Analysis of how your customer utilises your product or service, as well as information on certain features, is provided by this data. This marketing strategy also helps determine how well the product or service will appeal to your target market.
In observational research, people and events are observed in their most different habitats. Instead of using structured environments like study laboratories or focus groups, researchers can watch how their participants make decisions and respond to circumstances in their everyday lives. This type of research provides insights into the obstacles that users encounter while interacting with your product or service while revealing the specific aspects of your product or service that could be simplified or made more accessible for users to understand and apply.
Price research offers you an understanding of how much comparable goods or services in your market cost, what your target market is willing to spend and expected to purchase the products or services you offer, and what a reasonable price is for you to list your goods or services at. You may define your pricing plan using the information above.
Market segmentation segments your market's audience into different segments. There are several methods for segmenting your audience, and here are a few examples:
- Demographic characteristics, such as location, gender, or age.
- demographic variables such as average income and occupational status
- behavioural traits, including interests, aspirations, and subjects of interest.
You may better understand how to suit their demands and make sure your marketing efforts are practical by categorising your audience.
Undertaking competitive analyses can provide you with a profound comprehension of your market and the industry's rivals. Such studies offer insights into successful practices within your industry, indicate your audience's product preferences, identify the competition that necessitates keeping up with or surpassing, and suggest means to differentiate your product from your competitors.
Using surveys lets you quickly connect with your audience and obtain their feedback directly. When conducted online, you can reach a wide range of participants, allowing them to provide their responses swiftly and conveniently. This type of market research can help you gain insights into your target audience's preferences and opinions.
Customer satisfaction and loyalty research can help you understand what would encourage the current customer base to do business with you again. This research will teach you the most effective approaches for promoting client satisfaction.
Conducting research for your campaign is crucial for formulating effective strategies and wise resource allocation decisions. To create a successful campaign, you must connect with your target audience by appealing to their core values, utilising relatable language, and meeting them where they are. By conducting campaign research, you can obtain data on the audiences you need to engage with to achieve your goals.
This type of research enables you to understand their knowledge and opinions, how they self-identify about your issue, and how they perceive your subject compared to other topics they care about.
P&G, the consumer goods company, conducts market research regularly to gather customer feedback on their products. For example, market research helped the company develop the Pampers brand, which became the best-selling diaper brand in the world. It also helped P&G identify a need for a male-focused line of grooming products, leading to the launch of the Old Spice brand.
In the late 1990s, McDonald's conducted market research to understand its customer's needs and preferences better. This led to the "Dollar Menu," which offered a variety of items priced at just $1. The menu was a huge success and helped the company increase sales and customer loyalty.
As a newcomer to the hospitality industry, Airbnb used market research to understand the needs and preferences of its potential customers. This helped the company develop a platform that offered unique, personalised experiences for travellers. Airbnb's focus on customer experience and personalised service has helped it become a leader in the industry.
Netflix uses market research to determine what types of content its customers want to see. The company analyses viewing habits and searches to identify popular genres and themes then uses that information to create new original content. This has helped Netflix become a leader in the streaming video market and maintain a loyal customer base.
Peloton used market research to develop its connected fitness equipment and accompanying app line. The company's study found that customers were willing to pay a premium for a home workout experience that felt like a boutique fitness class. Peloton's products and services have been hugely popular, and its stock price has soared since its IPO in 2019.
These examples show how market research can help companies understand their customers and develop products and services that meet their needs. By listening to their customers and responding to their feedback, companies can improve their products, increase customer satisfaction, and grow their businesses.
Undertaking market research can be an enlightening experience for businesses. Even if a company believes it understands its target audience well, market research may reveal untapped channels and effective messaging strategies to help enhance customer engagement.
By uncovering new insights and information, businesses can make informed decisions that improve customer experiences and drive business growth.