Guesswork or emotional reasoning can lead you to costly life mistakes. Talking business, failing to conduct market research can have dire consequences on the future of your company.
Most startups don’t have a marketing research budget since research can be time-consuming and cost a lot. But it’s an excellent idea to research your market whenever you’re launching a new product or trying a product update.
Marketing research empowers you to “test the waters” before taking the plunge. It enables you to understand your target audience, market conditions and your competition.
If you’re new to data collection, don’t worry.
Here is a tactical guide on how marketing research provides insight into your business’s health, the methods you can use to perform it and how to conduct market research for your business.
Here’s an overview of what we’ll cover:
What Market Research Is
Market research is any set of strategies used to collect information about your business’s target audience, customers and buyer personas to establish how viable your product is or would be among them.
Why Do Market Research for Your Business
Market research can either make or break your new business. It helps you understand your target customer’s problems and desired solutions so you can create products to fit what they want or need.
Moreover, analyzing your market reduces potential risks because it helps you understand what your business needs to stand out and thrive. Therefore, whether you’re starting a new business or introducing a new product, you will benefit from market analysis.
A common way to use market research data is carrying out a SWOT analysis to determine your business’s strengths, weaknesses, opportunities and threats.
But that’s not the only way you can use it to your advantage. With market research, you can:
- Determine the size of your target market
- Test demand for your products and how much customers are willing to pay
- Understand your competitor’s strengths and weaknesses
- Identify business performance issues
- Identify new opportunities
- Test whether your marketing strategies are effective
- Keep track of current trends in your industry
- Ensure optimal brand positioning
Types of Market Research
While there are myriad types of market research available, some standard techniques include focus groups, observation, online surveys and in-depth customer interviews. Your objectives and available budget play a significant role in determining the strategy you should choose for your business.
With that in mind, let’s see how these fit into the established market research methods and what each one entails.
Market Research Methods
The two main ways to gather information and collect actionable data about your products are the primary and secondary research methods.
If you’re unsure which methodology is right for your business, here is a detailed view of each to help you.
Primary research is the process of gathering first-hand information about your target market. You can get this data from varying sources, including focus groups, surveys and questionnaires.
Primary research is an excellent way for small businesses to understand what people think about their brand. It also reveals the actual user experience a customer has with a product or service.
Primary research includes:
- In-depth interviews: One-on-one discussions to get more insights into a participant’s beliefs on a particular topic or product. They can be face to face, online or over the phone.
- Observational research: You can opt to observe people quietly in a natural environment to gather critical information. For instance, you can watch how a retail shop handles its customers as they walk in and out of the store.
- Surveys: Customer surveys are among the most common methods product managers use while conducting a research study.
You obtain survey data by asking questions, so you get to discover people’s opinions, attitudes or perceptions towards a product. You can conduct feedback surveys online, on the phone or by mail.
- Focus groups: A focus group is a carefully selected group of participants brought together to discuss a topic. This research is ideal when physical interaction with a product or service is necessary to collect data.
You can have them watch a demo, test new products or answer specific research questions.
Secondary research uses public data and information other people have collected, including reports and market statistics. That might also include your business’s internal sales and marketing records.
Secondary research is beneficial for getting a general view of market trends and customer behavior throughout your product’s launch.
Here are a few common sources for secondary research:
- Public sources: Government statistics are the most common public sources of market research. The U.S. Census Bureau and Bureau of Labor & Statistics are valuable sources of information if you’re starting a new business. The U.S. Census Bureau business and economy page can help you get population data and understand how much people spend on your target product in specific areas.
For startups looking to minimize costs, these resources are useful. You can also find some of the information in your local library’s business reference section.
- Internal sources: You can get credible insight from the data your business already has. Your business’s previously collected data, including employee interviews, sales and marketing campaigns data, can help draw conclusions you can turn into decisions.
- Commercial sources: These are mostly market reports with industry-specific insights compiled by research agencies. You usually have to pay to use and download these.
How To Conduct Market Research Surveys
If you’re developing a product, you need to learn to do market research for business ideas.
Here is a guide to market research to help you gather the information you’ll need for your product development efforts.
1. Establish Your Goals
The first step towards successful marketing research is to identify a set of objectives to achieve.
You need to know the information you need to conduct the research more effectively. Establish what questions about your business you want to answer.
You might be curious about introducing a product or service and determining whether there is a market and demand for that. If your small business is already running, you can find out customers’ buying habits and challenges.
New businesses need to verify the viability of a product or service before introducing it to the market.
2. Define Your Buyer Persona
After listing your research objectives, define who your potential customers are. It should be clear who your target market is since not everyone will need your product or service.
Create buyer personas from your research to represent your ideal customers. Ideally, your buyer personas should share common traits.
Identifying a buyer persona helps visualize your targeted customer and inform your research strategy. Some important information to gather includes your customer’s age, gender, location, level of income, education level and occupation.
3. Identify the Right People To Engage for Market Research
Identifying your ideal buyer persona should help you pick a sample for your market research. This group serves as a representative of your target customers. Start by selecting people with the traits that apply to your buyer persona.
When selecting the people to engage in your research, include a mix of participants and your followers on social media. You can also engage your coworkers, friends, and LinkedIn connections and pick those that qualify for your research.
4. Choose a Research Method
To ensure you get the most out of your study, you must choose a suitable research method. Determine which method gives you the kind of information you want for your objectives.
For instance, you can invite your current customers and prospects for interviews or ask people to participate in your market surveys. If you’re carrying out secondary research, establish which sources you want to use.
5. Collect Relevant Data
While conducting market research, consider using both primary and secondary research.
While primary research will help you get lots of details, secondary research can help you see what’s missing and fill in the information gaps. That gives you the most actionable data for your market research.
The data you collect should be valid, unbiased and factual. Ensure you’re making decisions on accurate information from credible sources.
6. Analyze the Data and Take Action
Lots of data is good but useless without proper analysis. The data from your primary and secondary research can give you loads of information that is hard to analyze. Therefore, you must go through the sources to extract the relevant bits.
You might also want to write a summary of your findings, including the process you followed, what you found and your recommendation based on the results. Ensure you review the results and articulate the right course of action.
If you were running a hypothesis, take the results as they are without twisting the information to fit what you initially believed.
Final Thoughts: How To Do Market Research To Secure Your Business
Having learned how to do market research for a business plan, you can go ahead and implement these market research strategies.
Ensure to pick the proper research method and follow the correct procedure to get outstanding results that help you establish an action plan.
It’s worth noting that the trends your research uncovered are constantly changing. As a result, you must often analyze internal and external data to see where you need to improve.
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