Conducting market research is a tough job but, if done right, it can significantly improve the success rates of any business and its endeavors. Unfortunately, companies often find the task too overwhelming and tend to quickly outsource the process to a third-party agency. However, no one knows your products and customers better than you do and if you can afford to spare the time and resources, performing the task yourself can be very rewarding.
Furthermore, it’s not a one-off effort. The market constantly changes and therefore the data should be updated regularly. Studying how the consumer landscapes evolve will keep you in the loop and give you a strategic advantage.
In this guide, we’ll go through an introduction to market research and lay the foundation so you can do it yourself and with flying colors.
Let’s start with the basics.
What Is Market Research?
Market research is a succession of systematic data acquisition actions conducted to gather information on a specific group of consumers and identify their demographic profiles, habits, preferences.
The researcher uses different tactics and techniques to observe, interview and question a representative group of the business’s target audience and gather enough data to make statistically relevant conclusions.
Research falls into two general categories depending on the way it’s being conducted – primary and secondary.
Primary research, also known as field research, is an active form of investigation where the organizing company gathers first-party data by interacting with its customers, asking questions, and analyzing external factors.
Secondary research, also known as desk research, relies on the processing of results provided by third-party data sources such as research companies, public libraries, and educational institutions.
Both categories add different values to the final conclusions of the research efforts.
Depending on the approach you take when doing the research and the techniques you’ve employed, you can generate qualitative or quantitative results.
Quantitative results are the ones you can measure in numbers. They are usually acquired from close-ended questions in interviews and surveys. They visualize the statistical value and significance of the information you’ve accumulated.
Qualitative results are the ones you can not estimate precisely but have worth as additional observational data. Their value resides in humanizing the meaning of plain numbers and providing context to the statistics.
Types of Research
Based on the objectives of the company, there are three types of research that can be considered – exploratory, descriptive, and causal. They can also be thought of as the stages of investigating the problem or the cause for the research.
In exploratory research, the goal is to build an initial idea of the landscape, identify issues, and gather general information. The methods used here are usually interviews, focus groups, open-ended question surveys, secondary research, and observation. They deliver qualitative results that don’t offer statistical value and are not definitive enough to base decisions upon.
However, the objective of the researcher here is not to draw conclusions but to understand the customer’s profile and environment, observe their process, and pinpoint where to later focus their efforts. They can leverage this information in the next stage of their study to formulate the right questions and investigate further.
Descriptive research is the definitive stage of the study. The goal is to collect statistically relevant information about the target audience and measure it precisely. The methods used here are close-ended interview questions and various types of close-ended-question surveys where the participants choose from a selection of predefined answers.
The objective of the researcher is to test the information gathered in the exploratory stage, measure the frequency of the identified patterns, and draw concrete conclusions. The investigation should be repeated over time to monitor the changes in the sample’s behavior, opinions, and choices.
Causal research is used to determine the cause-and-effect correlation between variables. The goal is to test the theoretical information from the previous stages in a real-life environment and identify the relationship between variables. The results of the experiments are quantifiable and by manipulating the variables in different ways the researcher can monitor how the outcome changes, and make conclusions.
However, since it is difficult to completely isolate variables from outside factors, this type of research can not be completely relied upon to make decisions and is advisable to be used as an information source backed up with other data.
Market Research Methods
When conducting market research, there are various methods you can use, depending on your goals and objectives, and the stage of investigation of the problem that you are at.
However, no method alone can give you exhaustive results or a complete overview of your target audience. For optimal efficiency of the process and comprehensive conclusions, you should consider strategically using a combination of some or all of them.
- Focus Group Meetings. A moderator guides a scripted conversation between a sample of people who answer to a predefined profile and demographics. The researcher monitors the discussion without interfering and takes notes. The idea is to look at the subject of the research from a different point of view – the customer’s, and hope that some surprising insights might surface during the conversations.
- Individual Interviews. The researcher meets personally with a selection that is representative of the target audience and asks them close-ended and open-ended questions. The goal is to learn more about the customer’s profile, habits, behavior, and preferences.
- Consumer Surveys. The researcher lists questions relevant to the study subject and distributes them amongst a large sample of the target audience. The survey structure can include both open-ended and closed-ended questions, and various answer inputs. The purpose is to accumulate enough responses to formulate statistically valid results and draw conclusions.
- Covert and Overt Observation. The researcher watches the participants in their natural environment, studies their behavior, and takes notes. The observation can be secretive, i.g. without the informed consent of the customer, or open – when the person has agreed to be monitored. The power of these encounters is that they generate raw real-life data and provide valuable product usability and customer insights.
If you want to learn more about the specifics of these and other research methods, you can read DevriX’s article on the topic:
Benefits of Market Research
Market research involves a substantial investment of time and resources and is a step many companies choose to leapfrog. However, as every CEO knows, the main difference between running a successful business and a failing one is the decisions you make. Conducting research before rushing to make your moves has significant benefits that outweigh the costs:
- Facilitates data-driven business decisions. Basing your strategies and actions on rock-solid facts dramatically increases the chances of success.
- Delivers accurate relevant information. Being up-to-date with the market currents and its trends is always useful and enables you to act swiftly in any situation.
- Provides better customer knowledge. Being familiar with your customer will allow you to personalize the UX and to market and sell your products better.
- Enables you to make market predictions. The market is constantly changing, but doing research and updating it regularly will give you an insight into the background processes. By identifying the patterns, you will be able to foresee and prepare for future scenarios with improved accuracy.
- Gives you a competitive advantage. Market knowledge can help you make better decisions than your competitors and even outmatch their strategies.
- Supports smarter investments. All the research knowledge accumulated can be used to decide whether investments will be successful or not.
How to Utilize Market Research
Companies have different objectives depending on the industry, the stage of their development, and the scope of their target audience. Different types and methods of research can be conducted to clarify almost any concerns a business has, and the results can be leveraged to make informed decisions and investments.
Some of the most common subjects of research are:
- Competitor Analysis. Studies other companies targeting the same audience to identify their strategies, compare your products to theirs, and use the information to improve your performance.
- Pricing Strategy Insights. Analyze your product, audience, and competition, to identify the optimal pricing models for a balanced revenue and strategies that promote growth.
- Brand Market Positioning. Looks at the preferences of your customers and the specifics of the competition to strategically position your brand on the market.
- New Product Development Insights. Probe how the market will accept a new product by studying how they react to and interact with similar designs already in circulation.
- Existing Product Usability Testing. Improve your products by asking your customers for feedback, analyzing their user habits, and identifying common struggles.
- Customer Segmentation. Takes a look at your audience demographics, habits, work, and personal information, and groups them into cohorts based on the similarities. This will allow you to target them with more precision.
- Customer Satisfaction Assessment. Optimizes the efficiency of your services and the quality of your products by asking customers about their experiences and how content they are with your brand.
Market research might seem a complicated area at first, but, as with anything else, learning the basics is the first step to proficiency.
Once you understand the different research types, techniques, and the methods that work, you will be able to build your own strategy that meets your business’s objectives. By unfolding it and analyzing the results, you will have the confidence to make an informed decision at every stage of your journey.
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