- July 5, 2020
- Posted by: matogconsulting
- Category: Business Analysis
By Ayoade Apelegan
Market research provides researchers with a wide range of information ranging from, consumer purchase intentions, or feedback about the growth of the target market. It also provides an avenue to discover valuable information that will help in estimating the prices of their product or services and find a point of balance that will benefit them and the consumers.
When launching a new product, improving an existing product or service, or when you want to be a step ahead of your competitors, it’s important to carry out market research.
Market research will provide you with all the information that is needed to make a better business decision.
WHAT IS MARKET RESEARCH?
Market Research can be defined as the process of evaluating information about a market, product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business’s target market, the industry as a whole, and the particular competitors you face.
The process of market research can be done through deploying surveys via questionnaire, interacting with a group of people also known as a sample, conducting interviews either via phone call or face-to-face, and other similar processes.
MARKET RESEARCH DATA
There are two types of market research data namely;
This is the type of data that you gather yourself (first-hand) or hire someone (a market research firm) to gather for you through surveys, interviews, and talking to customers and other businesses. Examples of primary data are:
- Surveys: This involves asking customers a series of questions to better understand how they feel about a product’s features. Surveys consist of a list of questions that can be shared with an individual by phone, in person, on a card or paper, or online using survey software.
- Focus groups: Bringing together groups of people with a common characteristic, such as age, hobby, or buying habits, to better understanding their likes and dislikes is a focus group. Focus groups typically consist of 8-12 people with a moderator who poses questions for the group to discuss. Focus groups are a useful way of getting feedback on a new product, new features, or new ad campaign.
- Observation: Observation is the art of seeing and noticing. When researchers gather information simply by watching how a subject interacts with a product, the technique is known as observation. This is often used in comparing preferences for several types of products.
- In-depth interviews: Another market research technique is the one-on-one interview with an individual, during which probing questions are posed to better understand that person’s product preferences.
Secondary data is existing public information. It is the data that has already been collected and analyzed by others. Examples of secondary data are:
- Industry associations and trade groups – most associations publish annual outlooks
- Trade journals specific to your industry
- Government reports – such as the Census or annual federal procurement results
- Industry analysts – these individuals monitor the performance of public companies in your space
- University faculty members – see what research reports they may have published
- Websites – while Wikipedia isn’t a reliable source, there may be others that lead you to reputable sources and reports
- Competitor websites and materials – to convince potential customers to buy from them, they may share useful statistics and reports
REASONS FOR MARKET RESEARCH
The primary purpose of conducting market research is to equip business with the necessary information that is needed to make better and informed decisions.
Potential opportunities in businesses can be identified by conducting market research. Consumer needs which can be influenced by new technology and other conditions do change over time. By learning more about your customers, you can gather insights into complementary products and services, and you may find new needs that are not being met which can create new opportunities for your business.
Market research provides real and accurate information that will prepare an organization for any mishaps that may happen in the future. By properly investigating the market, a business will undoubtedly be taking a step forward, and therefore it will be taking advantage of its existing competitors.
Knowledge about competitors
Market research is a vital tool to carry out comparative studies.
Conducting the research helps businesses to have an understanding of what products and services competitors. Knowing about your competitor’s strengths and weaknesses allows you to have an understanding of what products and services your competitors are offering.
By conducting research, you can create a profile of your average customer and gain insight into their buying habits, how much they’re willing to spend, and which features resonate with them. Additionally, and perhaps more importantly, you learn what will make someone use your product or service over a competitor.
It reveals gaps that you can utilize to gain more customers. You can also learn what performed the best for the competition. In turn, you will be able to think more creatively while modelling your new strategy.
Test-running a new product
One can’t be too certain about the acceptance of a new product in the market. Market research must be carried out before a new business decision is taken. With market research, you’ll find out what approach you should take when marketing the product.
The growth of an organization is largely dependent on the way decisions are made by the management. Market research allows organizations to classify their objectives while following the current trends and take advantage by reaching out to their target audience.
Identifying problems in the course of running a business before they happen is crucial. Effective market research will not only help you predict some of the pitfalls that can occur but also it will save you a lot of money too.
Market research is crucial for a better understanding of customers.
Market research will help a business map out the full profile of its ideal customer. Having a customer’s information will help a business owner determine the market size and what informs the customer’s decision to buy.
Valuable insights like age, location, gender & income, which will help in creating effectively tailored marketing and pricing campaigns can only be gotten through conducting market research.
A product that must be manufactured or sold based on the specific needs of consumers can be determined through market research.
The market research also helps a researcher to understand how the customers perceive the organization or brand.
Determine market size
A researcher can evaluate the size of the market that must be covered in case of selling a product or service to make profits.
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TYPES OF MARKET RESEARCH
Market Research Methods and Examples
Primary Market Research (A combination of both Qualitative and Quantitative Research)
Primary market research is the type of research that is carried out on a first-hand basis or the type where a market research firm is hired to help gather information through surveys, interviews, and talking to customers and other businesses.
The data collected can be qualitative data (non-numerical data) or quantitative data (numerical or statistical data).
While conducting primary market research, one can gather two types of information:
Exploratory Information: Exploratory research is open-ended, where a problem is explored by asking open-ended questions in a detailed interview format usually with a small group of people also known as sample. Here the sample size is restricted to 6-10 members.
Specific Information: Specific research, on the other hand, is more pinpointed and is used to solve the problems that are identified by exploratory research.
As mentioned earlier, primary market research is a combination of qualitative market research and quantitative market research.
The qualitative market research study involves semi-structured or unstructured data collected through some of the commonly used qualitative research methods like:
Focus groups: Focus group is one of the commonly used qualitative research methods. Focus group is a small group of people (6-10) who typically respond to online surveys sent to them. The best part about a focus group is the information can be collected remotely, can be done without personally interacting with the group members. However, this is a more expensive method as it is used to collect complex information.
One-to-one interview: As the name suggests this method involves personal interaction in the form of an interview, where the researcher asks a series of questions to collect information or data from the respondents. The questions are mostly open-ended and asked in a way to facilitate responses. This method is heavily dependent on the ability and experience of the interviewer to ask questions that evoke responses.
Ethnographic research: This type of in-depth research is conducted in the natural settings of the respondents. This method requires the interviewer to adapt himself/herself to the natural environment of the respondents which could be a city or a remote village. Geographical constraints can be a hindering factor in conducting this kind of research. Ethnographic research can last from a few days to a few years.
Qualitative research methods are used by organizations to conducted structured market research by using online surveys, questionnaires and polls to gain statistical insights to make informed decisions.
This method was once conducted using pen and paper. This has now evolved to sending structured online surveys to the respondents to gain actionable insights. Researchers tend to use modern and technology-oriented survey platforms to structure and design their survey to evoke a maximum response from respondents.
Through a well-structured mechanism, data is easily collected and reported and necessary action can be taken with all the information that is made available first hand.
Secondary Market Research
Secondary research uses information that is organized by an outside source like government agencies, media, chambers of commerce etc. This information is published in a newspaper, magazines, books, company website, free government and non-government agencies and so on. Secondary source makes use of the following:
Public sources: Public sources like the library are an awesome way of gathering free information. Government libraries usually offer services free of cost and a researcher can document available information.
Commercial sources: Commercial source although reliable are expensive. Local newspapers, magazines, journal, television media are great commercial sources to collect information.
Educational Institutions: Although not a very popular source of collecting information, most universities and educational institutions are a rich source of information as many research projects are carried out there than any business sector.
STEPS FOR CONDUCTING MARKET RESEARCH
Knowing what to do in various situations that arise during the investigation will save the researcher’s time and reduce problems. Today’s successful enterprises use powerful market research survey software that helps them conduct comprehensive research under a unified platform and hence provide actionable insights much faster with fewer problems.
Following are the steps to conduct effective market research.
1: Define the Problem
Having a well-defined subject of research will help researchers when they ask questions. These questions should be directed to solve problems and they have to be adapted to the project. Make sure the questions are written clearly and that the respondents understand them. Researchers can conduct a test with a small group to know if the questions are going to know whether the asked questions are understandable and will they be enough to gain insightful results.
Research objectives should be written in a precise way and should include a brief description of the information that is needed and how it will obtain it. They should have an answer to this question “why are we doing the research?”
2: Define the Sample
To carry out market research, researchers need a representative sample that can be collected using one of the many sampling techniques. A representative sample is a small number of people that reflect, as accurately as possible, a larger group.
An organization cannot waste their resources in collecting information from the wrong population. The population must represent characteristics that matter to the researchers and that they need to investigate, are in the chosen sample.
Take into account that marketers will always be prone to fall into bias in the sample because there will always be people who do not answer the survey because they are busy, or answer it incompletely, so researchers may not obtain the required data.
Regarding the size of the sample, the larger it is, the more likely it is to be representative of the population. A larger representative sample gives the researcher greater certainty that the people included are the ones they need, and they can reduce bias. Therefore, if they want to avoid inaccuracy in our surveys, they should have representative and balanced samples.
Practically all the surveys that are considered seriously, are based on a scientific sampling, based on statistical and probability theories.
There are two ways to obtain a representative sample:
Probability sampling: In probability sampling, the choice of the sample will be made at random, which guarantees that each member of the population will have the same probability of selection and inclusion in the sample group. Researchers should ensure that they have updated information on the population from which they will draw the sample and survey the majority to establish representativeness.
Non-probability sampling: In non-probability sampling, different types of people are seeking to obtain a more balanced representative sample. Knowing the demographic characteristics of our group will undoubtedly help to limit the profile of the desired sample and define the variables that interest the researchers, such as gender, age, place of residence, etc. By knowing these criteria, before obtaining the information, researchers can have the control to create a representative sample that is efficient for us.
When a sample is not representative, there can be a margin of error. If researchers want to have a representative sample of 100 employees, they should choose a similar number of men and women.
The sample size is very important, but it does not guarantee accuracy. More than size, representativeness is related to the sampling frame, that is, to the list from which people are selected, for example, part of a survey.
If researchers want to continue expanding their knowledge on how to determine the size of the sample consult our guide on sampling here.
3: Carry out data collection
First, a data collection instrument should be developed. The fact that they do not answer a survey, or answer it incompletely will cause errors in research. The correct collection of data will prevent this.
4: Analyze the results
Each of the points of the market research process is linked to one another. If all the above is executed well, but there is no accurate analysis of the results, then the decisions made consequently will not be appropriate. An in-depth analysis conducted without leaving loose ends will be effective in gaining solutions. Data analysis will be captured in a report, which should also be written clearly so that effective decisions can be made on that basis.
Analyze and interpret the results is to look for a wider meaning to the obtained data. All the previous phases have been developed to arrive at this moment.
How can researchers measure the obtained results? The only quantitative data that will be obtained is age, sex, profession, and number of interviewees because the rest are emotions and experiences that have been transmitted to us by the interlocutors. For this, there is a tool called empathy map that forces us to put ourselves in the place of our clientele to be able to identify, really, the characteristics that will allow us to make a better adjustment between our products or services and their needs or interests.
When the research has been carefully planned, the hypotheses have been adequately defined and the indicated collection method has been used, the interpretation is usually carried out easily and successfully. What follows after conducting market research?
5: Make the Research Report
When presenting the results, researchers should focus on: what do they want to achieve using this research report and while answering this question they should not assume that the structure of the survey is the best way to do the analysis. One of the big mistakes that many researchers make is that they present the reports in the same order of their questions and do not see the potential of storytelling.
To make good reports, the best analysts give the following advice: follow the inverted pyramid style to present the results, answering at the beginning the essential questions of the business that caused the investigation. Start with the conclusions and give them fundamentals, instead of accumulating evidence. After this researchers can provide details to the readers who have the time and interest.
MARKET RESEARCH TIPS FOR BUSINESSES
Define the objective of your research
Before setting off on your research quest, think about what you’re trying to achieve next with your business. Are you looking to increase traffic to your location? Or increase sales? Or convert customers from one-time purchasers to regulars? Figuring out your objective will help you tailor the rest of your research and your future marketing materials. Having an objective for your research will flesh out what kind of data you need to collect.
Learn About Your Target Customers
The most important thing to remember is that your business serves a specific kind of customer. Defining your specific customer has many advantages like allowing you to understand what kind of language to use when crafting your marketing materials, and how to approach building relationships with your customer. When you take time to define your target customer you can also find the best products and services to sell to them.
You want to know as much as you can about your target customer. You can gather this information through observation and by researching the kind of customers who frequent your type of business. For starters, helpful things to know are their age and income. What do they do for a living? What’s their marital status and education level?
Recognize that knowing whom you serve helps you define whom you do not
It’s okay to decide who is not a part of your target customer base. In fact, for small businesses knowing whom you don’t cater to can be essential in helping you grow. Why? Simple, if you’re small your advantage is that you can connect deeply with a specific segment of the market. You want to focus your efforts on the right customer who already is compelled to spend money on your offer. If you’re spreading yourself thin by trying to be all things to everyone, you will only dilute your core message. Instead, keep your focus on your target customer. Define them, go deep, and you’ll be able to figure out how you can best serve them with your products and services.
Learn from your competition
This works for brick and mortar businesses as well as internet businesses because it allows you to step into the shoes of your customer and open up to a new perspective of your business. Take a look around the internet and your town. If you can, visit your competitor’s shops. For example, if you own a restaurant specializing in Italian cuisine, dine at the other Italian place in your neighbourhood or the next township.
As you experience the business from the customer perspective, look for what’s being done right and wrong. Can you see areas that need attention or improvement? How are you running things in comparison? What’s the quality of their product and customer service? Are the customers here pleased? Also, take a close look at their market segment. Who else is patronizing their business? Are they the same kinds of people who spend money with you? By asking these questions and doing in-person research, you can dig up a lot of information to help you define your unique selling position and create even better offers for your customers.
Get your target customers to open up and tell you everything
A good customer survey is one of the most valuable market research tools because it allows you to get inside your customer’s head. However, remember that some feedback may be harsh, so take criticism as a learning tool to point you in the right direction.
Creating a survey is simple. Ask questions about what your customer thinks you’re doing right, and what can be improved. You can also prompt them to tell you what kinds of products and services they’d like to see you add which gives you amazing insight into how to monetize your business more. Many customers will be delighted to offer feedback. You can even give customers who fill out surveys a gift like a special coupon for their next purchase.
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