If you want to launch a new product, service or brand, it’s essential to get the what, when and how right. Luckily, there’s enough data on the internet to help you build a successful launch strategy.
From social media platforms to competitor websites, you can find helpful business data everywhere. However, you need a well-planned market research strategy to help you make the most of this data.
This guide introduces you to market research, its importance and techniques and also discusses how to do market research for a business plan.
Understanding market research
Market research is the process of sourcing and analyzing information about your competitors, customers and market dynamics in order to make data-driven business decisions.
When writing a business plan, analyzing the market is a vital step that determines your long-term success because it gives you a deep understanding of your customers’ needs. With more brands using market research data to make decisions, the global market research industry is expected to reach $83.93 billion in 2023.
Market research can range from a small-scale study to a comprehensive data analysis, depending on your goals and budget.
But before learning how to do market research for a business plan, you need to understand why it’s so important for your business.
Why is market research important?
Market research helps you launch the right product or service in the right market by recognizing the needs and pain points of your target audience. It provides analytical data to help you identify high-demand products, unmet market needs and competitive price ranges for maximum profitability.
Here’s a breakdown of how you can benefit from market research.
Know what consumers want
Understanding customer requirements is crucial for your long-term success as an entrepreneur. However, 71% of marketers struggle to meet their customers’ expectations. You can set your business up for success by identifying customer needs through in-depth research.
Market research involves analyzing data from reliable sources to understand your customers and create products that meet their needs.
Increase sales and revenue
Market research takes the guesswork out of the product development process, helping you create products that are in high demand. It minimizes risky investments and maximizes revenue by ensuring good product sales.
When you understand customer requirements and pain points through market research, it helps you create products customers want. This, in turn, brings in more sales because customers are more likely to buy products that address their needs.
Understand competitors’ strengths and weaknesses
Market research isn’t limited to customer data but also includes competitor data. Reliable sources such as competitor websites, industry publications and trade shows provide helpful insight into your competitors.
By analyzing your competitors, you’ll discover:
- Areas where they’re performing well.
- How satisfied their customers are.
- Products they’re yet to launch.
- Areas where you can outsmart them.
With this data, you can offer innovative solutions that address unmet customer needs and give you a competitive advantage.
Create a personalized shopping experience
Customers expect a personalized shopping experience. They prefer brands that understand their individual needs. But while 46% of brands feel they’re providing a personalized experience, only 15% of consumers agree.
Market research enables you to identify the buying habits, preferences and pain points of each customer. Using this data, you can recommend products that appeal to each shopper and develop personalized communications that improve your brand’s positioning in the market.
Identify new opportunities
Market research helps you identify new business ideas and gain the first-mover advantage by developing innovative solutions. For instance, you can create new products to address an unmet need or serve an underserved group.
You also stay ahead of the curve and spot new opportunities when you keep tabs on market trends.
Whether you want to launch a small- or large-scale business, market research is a solid foundation without which your business might crumble. But before learning how to do market research for a business plan, let’s understand the different techniques involved.
Market research techniques
There are various types of market research techniques to choose from. Some may suit large-scale businesses with high research budgets, while others are best for startups and small businesses.
These techniques are classified into two main types: primary and secondary research.
Primary research is any research conducted directly by your in-house team to gather first-hand data about your customers, industry and competitors.
Primary research involves several techniques, such as:
- Online surveys: Online surveys are digital questionnaires used to collect data from an audience. Depending on the nature of the survey, respondents can remain anonymous or use identifiers such as their name, age and location. You can use online survey tools such as SurveyMonkey and Typeform to gather customer data.
- Customer interviews: Interviews give you access to highly personalized data. Unlike surveys, customer interviews require you to ask questions to consumers face-to-face. As you need to reach out to each participant, the sample size may be small, so it may be challenging to generalize your findings to a large population.
- Observational research: This involves observing consumers’ buying habits and trends from afar without interacting with them. For example, you can observe which product variant most customers click on first when they visit your eCommerce website.
- Focus groups: A focus group is a small number of your target customers participating in a guided discussion about your brand. These groups usually comprise 8-12 people who are selected after careful consideration.
- Beta trials: Beta trials involve offering your products or services to a small group of people for free in exchange for feedback. These trials enable you to modify your offerings before launching them in the market.
While primary research is typically time-consuming, it provides unique data that can’t be obtained from secondary research. Primary research can also be expensive, so it may not be ideal for small businesses.
Secondary research involves sourcing third-party data that has been collected and analyzed by other organizations.
These organizations include:
- Government organizations: Public bodies such as the U.S. Census Bureau, Bureau of Labor Statistics or finance departments of different countries periodically publish reports that can be helpful to your business.
- Research institutes: These are institutes and organizations dedicated to conducting unbiased research across various industries.
- Competing companies: Your competitors publish case studies and market research data which may be relevant to your business.
Although secondary research involves third parties, the data collected through these organizations is sometimes more valuable than primary research data.
For example, reports from government bodies offer a more comprehensive perspective of the topics they cover, as these organizations have access to large amounts of information.
Due to its budget-friendliness, secondary research is ideal for small-scale businesses with limited budgets.
Now that you know the different types of data collection techniques, let’s discuss how to do market research for a business plan.
How to do market research for a business plan
Regardless of the market research technique you choose, you need to invest time, effort and resources in the data collection process. If you’re new to research, the process can get overwhelming, especially if you don’t have a well-laid plan.
To simplify the process, here’s a step-by-step tutorial on how to do market research for a business plan:
1. Define your goals
There’s a lot of industry-specific data you can collect through primary and secondary research. However, not all data is relevant to your research. Defining your goal gives direction to your research and helps you identify relevant data.
Some common goals you can set include identifying market gaps, setting a competitive price or understanding customer pain points.
With a clear research goal, you can identify the right customer groups to target, what research technique to choose and which questions to ask.
2. Identify your target audience
Your product or brand may not appeal to everyone. So, it’s essential to identify the specific customer group that will be interested in your offerings.
When you identify your target audience, you’ll focus your research on potential customers rather than waste time and effort on a larger group. This helps you gather relevant data, leading to more effective decision making.
To identify your target audience, you need to create a buyer persona — a fictional representation of your ideal customer. You can create a buyer persona using various differentiators such as age, gender, nationality, economic groups and interests. Any person who fits these criteria belongs to your target audience.
3. Choose a group of interest
If you have a large target group, collecting data from the entire group can be tedious. A large study group typically includes several variables that may not be relevant to your research.
Narrow down your group of interest by introducing new criteria that are crucial for your business. For example, if you want to launch an eCommerce business that caters to millennials, you can choose to study only those who use a particular social media platform.
This narrows down your sample size and makes data collection more efficient.
4. Collect relevant data
When studying your sample size, you’ll come across large amounts of data. However, an essential part of how to do market research for a business plan is to identify and collect the data that is useful for your business.
To ensure you’re collecting only relevant data, it’s important to choose the right market research technique. Depending on your goals, you can choose primary or secondary research methods or a mix of both.
For example, if you want to develop a new product, you can collect market research data through customer interviews, observational research and competitor websites.
After choosing a research method, craft questions that align with your goals. This will elicit detailed and accurate answers from your respondents.
For example, if you want to determine the price of a product, ask customers how much they’re willing to spend. Or, if you’re introducing a new product variant, ask customers which colors they prefer.
5. Analyze your competitors
Competitive analysis is an essential part of market research. This involves evaluating your competitors with the goal of outsmarting them.
One of the common tactics used for competitor research is SWOT analysis, which involves studying your competitors’ strengths, weaknesses, opportunities and threats (SWOT).
Using SWOT analysis, you can obtain relevant competitor data to identify market gaps and position your brand for maximum profitability.
6. Create and implement a strategy
After gleaning market research data, analyze the information to find new ways to improve your business. Use these insights to create a marketing strategy that helps you achieve your business goals.
If you’re new to strategy creation, the following questions will help you get started:
- What do consumers expect from your brand?
- Which competitor strategies do you want to implement?
- What customer suggestions align with your business goals?
- Are consumers ready to accept your new products or services?
- When is the right time to launch your brand?
These questions help you create an effective launch strategy so you can position your business for maximum profitability.
Final thoughts: How to do market research for a business plan
Regardless of the nature or size of your business, market research is an integral part of your overall business plan. By carefully studying your customers, competitors and industry trends, you can make data-backed decisions and speed up your brand’s growth.
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