Your business cannot thrive without market research in order to gain a better understanding of your customers, identify growth opportunities, and reduce risks. But how do you actually undertake market research?
What is market research?
Market research is the process businesses use to learn more about their customers and their market. It helps them understand what people want, what they like, and how they decide when buying products or services.
With market research, businesses can understand what their customers need, what affects their buying decisions, and what strategies competitors use. This is a key research activity when you’re starting a business. You can then use this information to make better marketing and product development choices.
Why do market research for your business?
Market research helps businesses make data-driven decisions instead of relying on trial-and-error, which will consume significant resources without expected gains. It can help you understand whether a new business idea will appeal to customers, which can save time and resources. This data-driven approach leads to more effective planning and execution, especially when it comes to marketing strategies, pricing, or product development.
When you know what you’re up against, you can set achievable goals based on your customers and competitors. This ensures you have a clear direction for your business’s growth.
Types of market research
The type of market research you leverage will affect the data you end up with. Each type serves a specific purpose and can provide unique insights that inform decision-making.
Before deciding on your process and methodology, take a closer look at the main types of market research:
Primary research
Primary research involves collecting original data directly from sources such as customers or potential customers. This type of research is tailored to answer specific questions relevant to the business.
Common examples of secondary research include:
- Surveys: A restaurant might conduct a survey asking customers about their dining preferences and satisfaction levels.
- Focus groups: A tech company could organise a focus group to discuss user experiences with a new app, gathering detailed feedback on features and usability.
- Interviews: A clothing brand might interview shoppers to understand their buying motivations and preferences.
Secondary research
Secondary research uses existing data that others have already collected. This type of research can provide valuable insights without the time and cost associated with primary research.
Common examples of secondary research include:
- Industry reports: A startup may review reports from market analysis firms to understand trends in the renewable energy sector.
- Government statistics: A real estate company might analyse census data to identify demographic shifts in a particular area.
- Academic studies: A beverage company could reference studies on consumer health trends to guide product development.
Lean market research
Lean market research is less about the type of research content and more about the process by which the research is done. Lean market research focuses on efficiency and cost-effectiveness, gathering enough information to make informed decisions without extensive investment in time or resources.
Common examples of lean market research include:
- Minimum Viable Product (MVP) testing: A software startup might release a basic version of its app to early users to gather feedback before the full launch.
- A/B testing: An e-commerce site could test two layouts for its homepage to see which leads to more sales.
- Social media polls: A fashion brand might use Instagram polls to gauge customer interest in new styles.
Common market research methodologies
Here are some common methodologies used in market research, along with their key features and applications:
1. Surveys
Surveys are structured questionnaires designed to collect quantitative data from a large audience. Depending on your situation, you can conduct these online, via phone, or in person.
Typically, surveys include multiple-choice or rating scale questions, allowing for easy comparison of responses. They are beneficial for reaching a large number of participants, making them a cost-effective market research method.
The most common application of surveys for market research is through customer satisfaction surveys. These are short questionnaires people get after availing of a product or service to identify areas for improvement.
2. Interviews
Interviews involve direct conversations between you and a participant to gather in-depth qualitative insights. They allow for a deeper understanding of participants’ thoughts and feelings, and they are flexible and structured depending on your research goal.
Interviews are useful for exploring why customers choose certain products or brands. These interviews are a great way to get feedback on product or service concepts, which can help you refine your offering before launching.
3. Focus groups
Focus groups consist of small groups of participants discussing a product or topic guided by a facilitator. Like interviews, focus group discussions provide rich qualitative data that may not show up in quantitative methods. The interaction among participants can spark new ideas and reveal diverse perspectives.
Businesses tend to use focus groups to test new product ideas or marketing messages before a wider release. Focus groups can also help you understand how customers will see your new product or messaging compared to competitors.
4. Customer observation
Customer observation involves watching how consumers interact with products or services in real time. This method captures genuine behaviour in natural settings, providing insights that self-reported data may miss.
The most common application of observation-driven research is usability testing. This can allow you to see how people interact with your brand or product so you can identify issues ahead of launching.
How to do market research: 7 steps to follow
Now that you know how market research works and the different methodologies at your disposal, it’s time to execute. Turn your market research plans into a process with these 7 steps.
1. Define the problem you want to solve
What is the problem or question you want to address? This is the foundation of your research and ensures your research efforts are relevant to your goals.
Write down what you hope to achieve with your research. Be specific about the outcomes you desire. Use clear, simple language to define the problem. For example, instead of saying “sales are low,” specify “understanding why our target audience is not purchasing our new product.”
If there are multiple problems, prioritise them based on urgency and impact on your business.
2. Find existing data and research related to your problem
Before starting your research, look for data that others have already collected. This data can serve as a baseline against which you can measure your findings.
Here are some sources to consider:
- Government data: Government agencies often publish statistics to help you understand economic conditions, demographics, and industry trends. For example, the Australian Bureau of Statistics (ABS) provides a wealth of information about the economy, population, jobs, health, and local areas. Many of their resources are available for free.
- Industry and market reports: Check reports from market research firms or industry associations that analyse trends and performance in your sector. These reports can give you a broader view of the market landscape.
- News articles: Look for recent news articles that discuss developments in your industry or highlight changes in consumer behaviour. This information can provide context for your research.
- Trade associations: Many industries have trade associations that collect and share data relevant to their members. These organisations can be a valuable resource for understanding market dynamics.
- Overseas markets: If you’re considering expanding internationally, use tools like Austrade’s market search tool to identify potential overseas markets where your products or services may succeed.
Start with a document where you can compile the existing research. Summarise the key findings you can relate to your research problem.
3. Create buyer personas and identify who to target
Develop detailed profiles of your ideal customers to better understand their needs, preferences, and behaviours. Base your targeting around demographic information, such as age, gender, income level, education, and location.
From there, you can pick which persona you want to target for your market research. Information from your buyer personas should tell you how to best communicate with customers to participate in your research.
4. Prepare research questions and methodology
The types of questions depend on your methodology, which depends on whether you want in-depth qualitative insights or broad quantitative data. Typically, a combination of both will provide a more comprehensive view.
Create specific questions that will guide your data collection. Ensure they are clear, focused, and aligned with your objectives. If you’re unsure about what to ask, read below for the section about common market research questions.
From there, you may use tools to send out surveys or draft a script for interviews. Once the data has been collected, analyse it to get meaningful insights.
5. Analyse your findings against your products/services
Evaluate how your collected market research data relates to your current offerings. Compile everything in a structured format and start identifying trends or common themes. You may find what currently drives your success and areas for improvement.
Assess whether your products/services meet customer needs as indicated by the research findings. What are the strengths and weaknesses of your offerings? Are they solving the problems that customers care about? Summarise these highlights so you can build actionable steps around them.
6. Analyse your findings against your competitors
Now, it’s time to analyse your research findings with the products/services and overall strategy of your competitors. Ideally, you’ve conducted a competitor analysis and already have this data for comparison.
Take your information on competitors’ offerings, pricing, market sentiment, and marketing tactics and evaluate them against your primary and secondary research. How do your customers perceive your competitors? How well are your competitors performing against the industry baseline? Look for areas where competitors excel and where there are unmet needs that you can then target.
7. Turn your analysis into actionable steps
It’s time to transform your research findings into concrete strategies you can use for your business. Create a detailed plan outlining specific actions based on your analysis, and include timelines and responsible parties for each action item. Remember that it’s important to make your plans as realistic as possible so that you can execute them.
For each plan, establish clear objectives that can be tracked over time (e.g., increase customer satisfaction by X% within six months). Implement a system for tracking the effectiveness of changes made due to the research. Regularly review progress against goals and adjust strategies as needed.
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Common market research questions
Looking for ideas for what you can ask to get to know your customers? Here are some you can start with and build from to fully customise your surveys, interviews, and more.
Demographic questions
- What is your age?
- What is your gender?
- What is your occupation?
- Where do you live?
- What is your highest level of education?
Demographic questions gather basic information about respondents, such as age, gender, income level, education, and location. This foundational data helps businesses segment their audience and tailor marketing strategies accordingly.
Why you should ask: Demographic data helps identify trends and patterns within different groups, providing insights into potential market opportunities.
How to leverage the data: By knowing who their customers are, you can create more personalised marketing messages that resonate with specific demographic segments.
Psychographic questions
- What are your hobbies or interests?
- How do you like to spend your free time?
- What are your goals for the next 12 months?
- What factors influence your buying decisions?
Psychographic questions delve deeper into the attitudes, values, interests, and lifestyles of consumers. They help researchers understand the motivations behind consumer behaviour.
Why you should ask: Psychographic insights help in building detailed buyer personas that capture the essence of target customers beyond basic demographics.
How to leverage the data: Use this data to create marketing messages that align with your customer’s values and interests.
Behavioural questions
- How often do you purchase [product/service]?
- Where do you typically shop for [product/service]?
- How did you first hear about our brand?
- What influences your decision to switch brands?
Behavioural questions focus on how consumers interact with products or services. They explore purchasing habits, usage patterns, and brand loyalty.
Why you should ask: Find out how customers engage with a brand throughout their buying journey.
How to leverage the data: Optimise touchpoints for better customer experiences and identify factors that affect loyalty, churn, or retention.
Product-specific questions
- What features do you value most in [product/service]?
- How satisfied are you with our current offerings?
- What improvements would you like to see in our products?
- Would you be willing to pay more for additional features?
These questions are designed to gather feedback on specific products or services. They help assess customer satisfaction and identify areas for improvement.
Why you should ask them: Insights gained from these questions can inform future product enhancements or new offerings that align with customer desires.
How to leverage the data: Understanding how customers perceive an offering can help you measure overall satisfaction and make necessary adjustments.
Competitive analysis questions
- What do you think sets our product apart from competitors?
- Why did you choose our brand over others?
- How do you perceive our pricing compared to competitors?
Competitive analysis questions focus on understanding how consumers perceive competitors’ products compared to their own. They provide insights into market positioning and differentiation.
Why you should ask: These questions help determine what sets your product apart from competitors and where improvements may be needed.
How to leverage the data: Insights about competitors can highlight gaps in the market that your business could exploit for growth.
Market opportunity questions
- Are there any products/services you wish were available that currently aren’t?
- Would you like to try a new product that addresses your needs more effectively?
- How likely are you to recommend our product/service to others?
Market opportunity questions aim to uncover unmet needs or emerging trends within the market. They help identify potential areas for growth or new product development.
Why you should ask: By understanding what customers feel is missing in the market, you can innovate and develop products that meet those needs.
How to leverage the data: Use data on emerging trends early to adapt quickly and maintain a competitive edge.
Streamline your business with the right tools
With market research, you can gain critical insights to help you make data-driven decisions. This process not only helps in developing products that meet customer needs but also enables companies to tailor their marketing strategies effectively.
Using the right tools is crucial for businesses to streamline operations and focus on growth. For example, tools like Payroller simplify small business payroll by ensuring compliance and making pay runs easy. Cloud payroll software allows businesses to concentrate on what truly drives growth—enhancing products, improving customer satisfaction, and expanding market reach.
The future is bright for those who invest in understanding their market and equipping themselves with the right resources—so take the leap and watch your business soar!
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