Fundamentals of Market Research
Path to business success may vary depending on the type, size, and industry of a business. However, there is a common requirement essential to achieve your business goals: knowing your market! Understanding your target market, who your buyers are, and how they make their purchase decisions is necessary if you wish to succeed. Well, the best way to do so is market research.
What is Market Research?
Market research is a process that involves gathering, analyzing, and interpreting information about your target market, audience, and competition. This process uncovers the suitability of your product or service for sale in a selected market and the purchasing behaviour of your potential clients. It also helps you understand your position against your competitors.
There are two ways of conducting market research:
1. Primary Research
Primary research involves first-hand information about your target market and your potential customers. It specifically addresses your market intelligence needs. Customer surveys and interviews are the most common examples of it. Primary research is quite beneficial if you wish to gain insight into the behaviours and habits of your target customers.
2. Secondary Research
Secondary research means collecting your market data using secondary resources, such as market statistics, trend reports, industry data, etc. It is handy if you need an overall analysis of your target market feasibility and competition.
There are various types of market research methods you might choose based on your needs. You may go with just one if you need information on a specific area, or you may use most of them to compile a more comprehensive market analysis. Here are some commonly used types of market research:
- Focus Groups
- Buyer Persona Research
- Observation-Based Research
- Market Segmentation Research
- Product/Service Use Research
- Competitive Intelligence
- Pricing Research
- Campaign Research
- Customer Satisfaction and Loyalty Research
- Brand Awareness Research
Why is it important?
Market research enables you to determine the feasibility of a venture before committing your resources to it. It also helps make your key business decisions. This can be very useful while entering a new market, launching a new product, updating your services, and revisiting your marketing strategy.
Market research allows you to understand your market, competition, your buyers, their pain points, and desired solutions. With this understanding, you can craft your products or services, or the ways you provide them, to appeal to the consumer and gain their loyalty.
Market research matters because;
- Providing an excellent customer/user experience is the only way to win.
- Market research can explain the reason behind customer behaviour that will let you improve customer experience.
- It helps you beat assumptions and trends that may drag your business in the wrong direction.
- Market research conducted at the right time saves you time, money, and resources. It prevents untested decisions and provides valuable insights from the beginning.
Basic Elements of Market Research
Different types of market research involve varying steps to follow. However, some components must be a part of every market research report.
Never forget to define your buyer persona.
Before you dive into the consumer behaviour in your market and industry, you must know and define who your target customers are. Buyer personas are fictional, generalized representations of your ideal customers. Creating buyer personas is essential before you move ahead with your market research.
Gather market intelligence.
You might have a specific objective for your market research. For example, you might want to learn more about the buyer behaviour before launching a new product line, and merely conduct a consumer survey. However, having survey results without sufficient market knowledge would lack context. Hence, gathering relevant market intelligence is always essential for market research.
It will help you see which external factors may have an impact on your business. Even though you are familiar with that market, it will refresh you on the latest developments that may go unnoticed.
Analyze your competition.
Your main goal may not be a competition analysis while doing market research. Nevertheless, a competition section in any kind of market research report does no harm. It will provide valuable insight and put depth into your context.
A brief competition section in your report should involve at least two steps:
- List your primary competitors, but keep in mind that it might not be a simple task. Sometimes, a company might operate in a different field than yours, but a division of it might compete with your main product. For example. Amazon is known for its e-commerce services; however, Amazon Prime competes with Netflix over its streaming service.
- Determine the position of your business to your competitors. This step will enable you to compare your strengths and weaknesses and test your unique value proposition.
End your report with an action plan.
After gathering, evaluating, and analyzing intelligence, it is time to draw a roadmap for how you will respond to your findings. It is the most effective way to make the results useful to your business. You should develop a clear step-by-step action plan to follow. Otherwise, you may get lost within the details and waste your resources along the way.
Market Research as a DIY Project?
Every small business owner can conduct their own market research for purposes such as improving products and services or adapting to the market. In fact, this should be a continuous process to keep your business alive and always respond to your customers’ needs. If this is your case, you may just do it yourself and test your results.
On the other hand, if you need thorough market information for a serious venture that you will invest (money, time, or resources), you’d better ask for professional help. DIY in such a case would put your investment at risk. Here’s what may go wrong:
- Conducting comprehensive market research is a demanding process that requires knowledge of research methods and specific skill sets. From the research design to the conduct and analysis, it may cost you more time and resources than you think it would, and you cannot buy your time back.
- There is also a terrible possibility that the results may be far from the market realities. Your findings may be digressed due to resource quality, methods used, and questions asked. A market research expert would know how to achieve accurate results.
To conclude, feel free to explore your market, consumers, and competition yourself for your everyday marketing activities. If you are pursuing a potentially risky venture and will put finances in it, then, take the liberty to ask for professional help. No doubt, the results will be worth your investment.