What Is Market Research and Why Is It Important?
When you’re trying to develop the right business model, make market research a priority. What is market research? It’s the process of determining who your audience is, what they want — and how to convert them into paying customers.
Curious to learn more? Read on to learn why market research is a critical part of your business strategy!
Know Your Consumers and Competition
When you’re trying to build a customer base, you need to know who your customers are first. Similarly, you need to know who your competition is — and how you can carve out a different niche.
A good market research guide always suggests building buyer personas. In other words, who are the audiences most likely to engage with your products? There will be more than one type of customer, so it’s wise to flesh out a few personas.
Consider the age, income, gender, and location of prospective customers. Think about whether they will have children or not, or if they will be married. It’s okay to realize that your product or service won’t appeal to everyone!
You’ll want to be aware of your competition. While you may overlap in the types of personas you attract, you can use strong research questions to differentiate yourself. When you make data-driven decisions, you stand a better chance of long-term success.
What Is Market Research?
In a nutshell, market research is the process of learning more about what your customers or clients want. This can happen through surveys, interviews, or polls. Leveraging social media is another great way to find out how people respond to your business.
Knowing how to make a business plan is one of your first steps in running a business. But if you do this without considering the needs and reactions of your audience, you run the risk of stagnating or losing business. Performing market research as part of your business plan gives you data that can drive your adjustments.
When it comes to how to get market research, you can assign your employees to this task. They can conduct surveys or interviews. You also can tap into a market research firm’s expertise.
Plan How to Start Market Research
Once you have created buyer personas, you can focus on constructing good research questions. You’ll want to develop questions that don’t make assumptions about buyer habits. You could create different sets of questions for each type of buyer persona you’ve created.
Determine the best way of doing the research. When you’re finetuning a new product, you may want to have focus groups provide some honest feedback. It could be more beneficial, however, to get concrete numbers on customer preferences for a new service you’re offering.
You also may want to try techniques like customer observation or field trials. With the observational approach, you take notes about how your customers behave in your store or online. You may notice, for instance, that the layout of your store is offputting or that customer service needs some enhancements.
And with field trials, you may test out a new product, like an ice cream flavor, at a particular store or with a select group of customers. You can try a new product before committing to a full rollout. As an example, you may want to limit your sample size to 10 people fitting each of your buyer personas.
During trials, you’ll want to use tools like surveys and feedback cards. To get really focused feedback, you can use interviews to gather responses and ask follow-up questions. Then you can make appropriate adjustments.
Throughout the market research process, you want to keep track of your findings in an organized way. Map out your goals and provide detailed information on the audiences you’re using. Include all numeric data and summarize your key findings, surprises, and action plans.
The Value of Market Research
The value of market research rests in its ability to help you determine marketing strategies and products. If you don’t engage in regular market research, you’ll avoid determining why some customers don’t come back. Avoiding this information prevents you from rerouting your strategy before it’s too late.
When you work with a market research team, you gain access to their expertise. For instance, Will Johnson of The Harris Poll leads one of the most well-respected market research companies in America. They’ve conducted surveys and other forms of market research to help anyone from presidential candidates to large organizations.
With effective market research, you can find a new niche or bring unhappy customers back into the fold. Take the time to read product reviews and find customer needs that even your closest competitor can’t satisfy. You’ll be able to tweak your service and address an unmet need.
Know the Difference Between Qualitative and Quantitative Research
When you’re planning how to start market research, you should know that there are different approaches. Ideally, you’ll use a mix of objective information and subjective responses. Additionally, you should use internal and external processes to yield a robust response.
Quantitative research refers to that which uses concrete facts and numbers. For example, surveying 500 people and tabulating responses to a set of questions would yield specific numbers.
Ultimately, you can use those numbers to figure out percentages. You might be trying to figure out what percentage of existing customers respond favorably to a new product idea. In that instance, quantitative research would be most useful.
On the other hand, qualitative data may ask questions related to customers’ feelings about a product. You can gauge customer reactions to a particular color or slogan through interviews. Or you can conduct focus groups, which are small groups of people whose opinions you want to gather.
Use Primary and Secondary Research
Primary research refers to the research that you conduct through your organization. This could include surveys given to a hand-picked audience of customers or potential customers. You’ll be in full control of the data as well as the process of administering the surveys, polls, or interviews.
With secondary research, the research happens outside of your organization. For example, if you run a restaurant, you may want to look at trends for similar types of restaurants nationwide.
Is everyone expanding their menu options to include more vegan and gluten-free options? Or would you be better off sticking with your current line-up?
When you consult data collected by a national governing board in your industry, that would be secondary research. The best small business market research will include a blend of internal and external sources. And it will use both quantitative and qualitative information.
Create More Effective Promotional Materials
By following a market research guide, you can determine how to invest in promotional efforts. It may be that your target demographic gravitates toward Instagram more than other social media platforms. When you know this, you can avoid wasting money on Facebook ads or Pinterest promotions.
With social media ads, you’ll be able to target your ad campaigns based on gender, age, and other important factors. Using insights from Facebook ads and Google Trends, you can stay on top of what potential customers are thinking.
With Google Trends, for instance, you can check out the latest keywords connected to your industry. Then you can use those keywords in your search engine optimization (SEO) strategy.
Are physical advertisements or posters effective for your audience? If market research demonstrates that ads in the local paper or on bulletin boards work, keep doing them. On the other hand, you’ll save a lot of money on printing if you discover that the postcards or inserts don’t work.
Refine Your Business Strategy
All businesses need to be willing to adapt. And market research is a significant tool to make that happen.
You’ll know if you need to allocate more money toward a marketing budget. Or you’ll learn if you’re overpricing products. Conversely, you may be able to nudge some prices higher to increase profits.
Do people know your brand? You can gauge whether your logo and visuals are resonating with customers. If not, you might need to aim for refreshed logo and stronger brand visibility.
If you see declining sales over the first quarter of the year, use your market research to adjust your business strategy. Track how specific buyer personas respond to new tactics during the second quarter. And then make additional adjustments based on what you learn.
Build Better Products and Services
What is market research? It’s your strategy to help tailor your marketing campaign and business decisions. When you make a point of conducting regular market research, you increase your chances of surviving and thriving as a business.
For more tips to generate the business leads you need, check back for new articles!