January 3, 2022

Market Research: How Data Defines Business

Market Research: How Data Defines Business

Customers in digital spaces have a virtually limitless supply of options for solving any of their unique problems. As the internet evolves, product research is becoming more convenient and there is little need to settle. Consumers have the luxury to choose the perfect product or service that matches their needs and values.

Market research is nothing new. Most businesses accept its importance and integrate it into their decision-making to some degree. As competition grows, however, and customers have more opportunities, market research is becoming mission critical.

Marketers need a deep understanding of their buyers, how they behave and what influences them. There’s more noise than ever, and consumers can opt for the brand that aligns with their wants and needs. With the right market research strategies, marketers earn the insights that drive product development and messaging that truly connects.

Market research has evolved considerably from the basic market survey. The influx of marketing analysis tools and methods have transformed almost as quickly as buyer behaviors.

Marketers now have a litany of primary market research and secondary market research capabilities. With more access to richer, more complex quantitative and qualitative data, prioritizing methodologies and measurements requires greater care.

Marketing needs to be grounded in adequate marketing research to be effective. This article will walk you through the breadth of market research and offer step-by-step direction for developing practical market studies.

In this article, we’ll explore:

  • What Is Market Research?
  • Primary vs Secondary Research
  • What Are the Types of Market Research?
  • Why Is Market Research Important?
  • Steps for Conducting Market Research
  • Benefits of Efficient Market Research
  • Market Research Report Template

What Is Market Research?

Market research is an ongoing process of collecting data about your target customers and industry. Information is gathered to assess how products are performing and to find product opportunities based on customer needs.

With market research, you can immerse yourself in the customer situation. You can develop deep understandings of their challenges, pain points, behaviors, desires and restrictions. Research answers common questions that directly impact your sales potential:

  • How do your target and current customers perform their product research?
  • Which of your competitors is valued among consumers for their value and product offerings?
  • What are the emergent industry and consumer trends?
  • Who makes up your market? What are their challenges and pain points?
  • What influences target customers in their purchase decisions?

Answering these questions leads to better products and services that match the consumer’s willingness and ability to buy. There are numerous research methods to arrive at these answers. Depending on your market, some tactics may be more effective than others, and it’s helpful to understand their distinctions.

What Makes Market Research So Important?

Customer satisfaction is only possible through researching what matters to them. The valuable information derived from quality research helps businesses plan ways to boost satisfaction.

The customer-first model of market research provides immediate insight for current campaigns and resources to aid in better forecasting. Businesses will be better prepared when they have a lock on consumer trends and predictable behaviors.

Market research gives marketers the ammunition to carve out a competitive advantage that improves satisfaction. This generates not only new business but also reduces customer churn and, subsequently, reduces costs.

Primary vs Secondary Research

There are two overarching categories of market research — primary research and secondary research. Both entail methods that can be combined into a custom research strategy that generates the most constructive insights.

Primary Research

Primary research consists of the studies that you develop and execute. These can be crafted to accomplish specific goals, like getting information to fine-tune market segments and ideal customer descriptions. Primary research has two subcategories — exploratory research and specific research.

1. Exploratory Research

Exploratory research is more qualitative in nature. This is the initial step taken when problems are not completely clear. There may also be a vague product but uncertainty as to whether it is worthwhile. Marketers may conduct small surveys or focus groups to discover various opportunities worth investigating further.

2. Specific Research

Specific research is the deeper dive into challenges or opportunities that exploratory research determined to be viable. This research involves a more rigorous process of segmenting audiences and researching ways to solve their issues.

Secondary Research

Pre-existing data from outside sources and public records are the focus of secondary research. There are three forms of secondary research:

1. Public Sources

Public resources are normally freely available for anyone to access. These sources are incredibly valuable and full of usable information to craft buyer personas. Government statistics from the U.S. Census Bureau, for example, offer all kinds of usable demographic data.

2. Commercial Sources

Agencies like Pew, Ipsos and Gartner conduct relevant and targeted market research studies for the benefit of entire industries. At a cost, these entities supply market data that clearly define consumer trends.

3. Internal Sources

Internal sources are free and exclusive — it’s your own company data. Look at month-to-month KPIs, annual reports or past studies. In reviewing your current sales metrics and historical data, you can identify patterns to guide new marketing efforts.

What Are the Types of Market Research?

Primary and secondary research categorization is useful for outlining your plan but it does not drive action. Let’s look at some popular types of market research you can perform.

1. Interviews

Interviews are one-on-one conversations that are done in-person, virtually or over the phone. These are qualitative studies that allow for on-the-fly questioning. Interviewers can adjust their questions to dive into interesting points and move toward the insights they desire. Interviews not only provide elaborate answers but also non-verbal cues like tone and body language for further insight.

2. Focus Groups

Like interviews, focus groups give you immediate interaction with your target audience in a small sample size. These usually consist of around 10 carefully-selected individuals belonging to varied market segments. Focus groups can be assembled to test ideas, watch presentations, answer questions and discuss possible solutions.

3. Product Research (Service Use)

Product use research reveals the value that target consumers see in your product or service and its various features. UX researchers employ this research frequently to continually improve products for better usability.

4. Observation-Based Research

Observation research is a non-intrusive view into how and why consumers use your product or service. You can see their natural, uninfluenced and unbiased interaction with your product to discover current or potential issues.

5. Buyer Persona Research

This research lets you construct detailed descriptions of target audiences, their problems, solutions they desire and what they need. Researchers can use pre-existing lead information in CRMs to find patterns of behavior. They could also issue website surveys, perform interviews or even solicit feedback from internal sales departments and managers.

6. Market Segmentation Research

Market segmentation involves taking the entirety of your target audience and breaking them into smaller groups. These segments can be based on defining characteristics important to your study, such as demographics or psychographics. By segmenting audiences, you can more accurately pinpoint their problems and goals to develop apt solutions.

7. Pricing Research

It is crucial to hone in on prices that maximize profit with each sale without sacrificing potential customers. This business research digs into industry pricing schemes, what competitors charge for similar products and what customers find reasonable. With this information, you can create a pricing strategy that delivers maximum value for your business and your customers.

8. Competitive Analysis

Competitive analysis is extremely valuable in understanding what consumers desire and how you can improve your market share. By looking at the competition, you can see what products and practices are effective so you can replicate that success.

It also shows you gaps in the market, needs that exist but are not being fulfilled by current products. By borrowing practices that work and working on unfulfilled needs, you can create a distinct competitive advantage.

9. Customer Satisfaction Research

Customer retention is far more rewarding and inexpensive than earning new business. With customer satisfaction research, you can investigate what motivates customers to remain loyal. If they value loyalty programs, exclusive offers or superior customer service, you now know how to enhance the experience.

10. Brand Awareness Research

Brand awareness reflects your reputation. Researching brand awareness shows not only the reach and influence of your brand but also how it is perceived. Your target audience associates your brand with particular values and attitudes. This research helps to uncover those beliefs so that you can work on your brand image.

11. Campaign Research

Previous performance of past campaigns shows what resonated and what fell flat with your target audience. Isolating successful elements of prior campaigns to apply to current efforts can leverage the audience’s proven values.

Most Effective Steps for Conducting Market Research

Market research is fairly formulaic no matter your business or market. The following steps will guide you through an effective research effort.

1. Define the Problem

Research needs to start with a clear and specific goal or problem that needs solutions. With a better definition of their focus, researchers can tailor more productive questions and research methods. Before initiating a broad study, small test groups should be used to see if questions are yielding desired insights.

2. Define the Sample

There is obviously no way to survey every member of a population. Researchers need to assemble manageable portions of target audiences in a way that provides accurate representation of the whole.

For effective sampling, marketers need to be careful to choose members of the correct population, defined by important characteristics. They also must try to maximize their sample size, pushing the limits of their capabilities. The larger the sample size, the more concrete the insights.

Samples can be acquired in one of two ways:

  • Probability sampling: Members of a population are chosen at random so every member has an equal chance of being selected. This sampling lets researchers know exactly how confident they can be in their results.
  • Non-probability sampling: Population members do not have an equal chance of being selected. This is considered to be less accurate and desirable than probability sampling. However, if you have limited resources, it may be the only sampling method available.

Convenience sampling is a good example of non-probability sampling. Let’s say you are studying the attitudes of college students towards your products. If you only survey students at the local college, this is not a representative sample of the “college student” population.

3. Collect the Data

When you have identified the problem, your research method and representative sample, you can collect the data. At this stage, it is important to audit the practicality of your data collection method to reduce errors and waste.

4. Analyze Results

There are no inherent actionable connections in the raw data yielded from collection efforts. Thorough analysis of the data to determine its meaning provides the guidance in building solutions.

Quantitative data is relatively easy to sort and interpret, making it valuable in many business aspects such as forecasting. Qualitative data derived from open-ended questions, however, are harder to organize into clear insights. In analyzing patterns of responses, researchers need to be able to identify with the customer’s thought process.

Accurate analysis is only possible with unbiased, carefully crafted research methods. The information needs to be relevant and real to pinpoint opportunities for business growth.

5. Make the Research Report

Research reports are purposeful presentations of the market analysis. These are not esoteric scholarly articles. Business leaders and stakeholders use these reports to drive decisions, so they need to be palatable for those audiences.

Storytelling in common terms is a good approach to creating a research report. Starting with the conclusions you gained and the study’s basic background is an efficient way to present usable information. More complex research findings can be detailed later for interested readers.

6. Decision Making

Market research is the foundation for any good business decision. With the information behind how, why and what your customer’s buy, you can make more informed marketing decisions.

Most Common Benefits of Efficient Market Research

1. Informed Decision-Making

Decisions can be made with or without research. However, product development based on assumptions and personal values will likely fail. With ongoing research, businesses keep their finger on the pulse of valued populations to drive more profitable decisions. They can be more responsive and confident that they are moving in the right direction.

2. Accurate Information

A market study provides truth, accurate information about market trends and consumer needs. Marketing implementations will have more predictable results. Marketers can avoid missteps, ensuring that the brand is promoted in a positive way.

3. Market Size Assessment

Marketing is an investment and businesses need to make sure they are spending money that yields returns. Research can determine the breadth of your available market. By knowing where potential customers exist, marketers can avoid wasting ad dollars and marketing efforts in empty spaces. They can also structure their sales teams to get the most opportunities out of their territories.

4. Sales System Optimization

The customer experience is key to conversion and customer loyalty. The sales system can work to that effort and understanding what customers need will help you optimize your system. Maybe your customer needs a shorter sales cycle, or areas to address in presentations. Those insights can help you leverage efficiency in every stage of the sales process.

5. Insight into Customer Tastes

Customer preference determines their purchases, so it makes sense how this is a huge benefit to marketers. But preferences and purchase habits evolve, and it happens faster now than ever before. Trend rise and fall and what is in vogue today may not be tomorrow. Market research not only shows what products customers prefer now but can help predict what will be needed later.

6. Understanding of Customer Perceptions

Brand perceptions are as important as product perceptions. In B2C contexts especially, brands carry emotional associations that consumers integrate as part of their desire. Market research can help businesses understand what customers think of them. With that information, they can direct branding initiatives or product development to better suit their goals.

7. Customer Communication Guidance

Adopting the right voice and message within the right channel ensures you are truly reaching your target audience. Market research can show what is relatable to your audiences and the best places to engage them.

8. High ROI

Market research prevents waste and promotes optimization. Every aspect of a business, from its advertising to its mission statement can benefit from research. Goals happen first, and research must follow in order to develop strategies that can achieve them. When research is meaningful and intelligent, growth is guaranteed.

Market Research Report Examples

Over time, marketers have developed popular market research report styles that add pragmatism to research findings. When you conduct research, consider these effective organizational templates to add impact to the data.

1. Five Forces Analysis

The Five Forces approach is an industry research tool that looks at the economic dynamics of an industry. The following five elements help describe competition and opportunity within a particular industry:

  • Competition: How much competition is in your industry? How will this affect profits and product development?
  • Potential for New Entrants: Is it easy for new competitors to enter the industry and take market share?
  • Supplier Power: How many suppliers do customers have to choose from? What level of control do you have over pricing?
  • Customer Power: How many customers are there in your industry? How much do they influence the product assortment and price thresholds?
  • Substitution Threat: Do other industries offer solution alternatives to the products you and your competitors provide? How will this affect pricing schemes and profitability?

Businesses use the Five Forces model to understand the potential and powerpower dynamics of their industry. With these insights, they can drive a business strategy that acknowledges the role of customers and competitors.

2. SWOT Analysis

A SWOT (strengths, weaknesses, opportunities, threats) analysis helps businesses discover possibilities and obstacles. It seems too simplistic to be worthwhile but staying strict to the format can allow you to view your situation objectively. The range of insights gained from a SWOT analysis can guide your branding, project implementation and campaign efforts.

Determining your strengths, weaknesses, opportunities and threats is fairly straightforward when you have a clear objective. Being specific about what you are analyzing is critical to keeping your evaluations relevant. Objectives that are too broad can create too many data points to assess, which becomes overwhelming and indecipherable.

3. Market Surveys

Surveys are arguably the most effective quantitative tool in getting specific insights that can be applied to a broad population. You can shape your survey to only generate usable, goal-oriented data. Information gleaned from surveys can reveal what products customers desire, how they view competition or what characteristics define them.

For easy data analysis, multiple choice and ranking questions can let you automate insights from a large data pool. Open-ended questions are more qualitative in nature and harder to organize. Researchers need to take time personally analyzing responses to draw connections.

4. Focus Groups

Focus groups are qualitative research settings meant for collecting rich, but not high-volume, information. Questions for focus groups can be applied loosely, often changing on-the-fly depending on the direction of the discussion.

Any questions laid out should be open-ended. The point of the small sample size is to become immersed in the consumer’s thought process around purchasing. Asking questions about feelings around competition, products or price generates answers towards that end.

Use your focus groups to offer product prototypes or demonstrations. Talk with them about its fit for their needs. How does the pricing influence their purchase decision? Do you do enough to overcome the competition?

Strive for an in-depth conversation and not necessarily a huge number of questions. Let questions guide the conversation but set a limit to avoid creating a Q&A session.

Final Thoughts

Market research is an ongoing process that sets the stage for any successful marketing effort. From day one, any business decision should be backed by comprehensive research. When you apply the principles outlined in this article, you can expect to gain illuminating insights.

Qualitative research offers the most meaningful information in understanding how your customers make decisions. At Speciate AI, we use industry-leading technology to connect quantitative and qualitative data points. We leverage a largely untapped goldmine of unstructured data to provide actionable customer and industry insights.

With our solutions, clients have access to custom analytical tools to collect and decipher data with efficiency and purpose. Contact the Speciate AI team to learn how we target relevant data and derive practical meaning to find growth opportunities.