In some circles, market research is a catch-all term to ask the industry what it wants. “Do we know what the demand for this product is? Who is looking for our services anyway? Let me do some market research to find out,” someone might say.
But what does that actually mean?
Here is a simple definition of market research that encompasses all of the possible goals of this practice in less than 100 words:
Market research definition
Market research is the process of studying buyers in an industry, the product that those buyers want, and where they are currently getting it. By involving the right people and data, a company can use this research to position itself in the marketplace and predict where the market will go in the future.
Market research can answer a variety of questions about the health of an industry, but it’s hardly a crystal ball marketers can rely on for insights into their customers. Market researchers study different areas of the market and it can take weeks or even months to paint an accurate picture of the business landscape.
However, by examining just one of these areas, you can more intuitively see who your buyers are and how you can deliver value that no other company currently offers them.
Of course, you can make informed decisions based on your industry experience and your existing customers. Be aware, however, that market research has benefits beyond these strategies. There are two things to consider:
- Your competitors also have experienced individuals in the industry and a customer base. It is very likely that your immediate resources will in many ways match those of your competition’s immediate resources. Finding a larger sample for answers may provide a better benefit.
- Your customers do not represent the attitudes of an entire market. They represent the attitudes of the part of the market that is already attracted to your brand.
Why is market research important?
Market research allows you to get information from a larger sample of your target audience, removing biases and assumptions so you can pinpoint consumer attitudes. As a result, knowing the bigger picture can help you make better business decisions.
Here are a few examples of what market research can do to help you:
- Consumer attitudes towards a specific topic, pain, product or brand
- Whether the business initiatives you invest in are in demand
- Where to advertise or sell (geographic or online)
- Unaddressed or underserved customer needs that can be turned into sales opportunities
- Settings for pricing a specific product or service
When you get answers to these questions based on real data, you can make informed business decisions and minimize risk.
Types of market research
To give you an idea of how extensive market research can be, keep in mind that it can be too qualitative or quantitatively in nature – depending on the studies you are doing and what you want to learn about your industry. Qualitative research looks at public opinion and examines how the market feels about the products currently available in that market. Quantitative research looks at data and looks for relevant trends in the information that comes from public records.
Let’s talk about four different types of market research studies you can conduct, a potential target of any one, and how these studies will help you better understand your market.
Interviews are the one-on-one face-to-face meetings you can have with buyers in your industry. You can conduct interviews in person or over the phone.
Your respondents can answer questions about themselves to help you shape your buyer personalities. These buyer personalities describe your client’s age, family size, budget, job title, challenges they face at work, and similar aspects of their lifestyle. Having this buyer profile on hand can influence your overall marketing strategy, from the features you add to your product to the content you post on your website.
Focus groups are similar to interviews, but in this case you assemble a large group of people for a joint interview. A focus group is made up of people who have at least one element of your buyer personality in common – such as age or job title.
This type of market research can give you ideas for product differentiation or the characteristics of your product that make it unique in the market. Ask your focus group questions about your services (and show them examples) and ultimately use the group’s feedback to improve those services.
Surveys are a form of quantitative research that you can distribute by phone, email, or through an online survey. A survey can be aimed at people who have downloaded content from your website or who have interacted with a member of your company.
With enough completed surveys you can determine the satisfaction of your customers. This shows how satisfied your customers are with what you are selling them. You could ask questions like “How well did we solve your problem?” and “Would you recommend our product to a friend?”
The interviews, focus groups and surveys are all sources of primary data. Secondary data, on the other hand, is the public information – online and offline – that characterizes your industry. This includes competitor websites, social media business pages, trade magazines, market reports, and even government-published census data.
If you examine enough secondary data, you can see how much brand awareness you have in the marketplace compared to companies offering the same product or service as you.
The market research you conduct need not include all of the information sources described above. The data you collect depends on the needs of your business and what you’re most interested in right now.
Editor’s Note: This post was originally published in July 2018 and has been updated for completeness.