How to conduct market research (with types and benefits)
When a company creates and markets a new product or service, it's important for them to understand how their consumers make purchasing decisions. Marketing and sales professionals often conduct market research to predict how well a product or service might perform on the market and develop a strategy that may increase success. Learning about market research can help you gain skills that allow you to create effective promotional and sales campaigns. In this article, we explain why market research is important, describe its types and benefits and share how to conduct market research of your own.
Why is it important to know how to conduct market research?
It's important to know how to conduct market research because it can help you determine how consumers may respond to a product or service you offer. Releasing products into the market always involves some level of risk, but you can minimise the potential for loss by surveying consumers and studying statistical data that reveals what consumers in your target market purchase based on quality, price and application. You can also use market research after a product launch to measure how well it's performing and whether your product or strategy might benefit from changes.
Related: 8 essential marketing manager skills
Types of market research
When conducting market research, professionals often reference many sources and use different techniques. Here are the two main types of market research and the elements of each:
This is research you gain directly from consumers in your industry. Primary research involves communicating with consumers in person, through phone surveys or online polls to better understand the needs and purchasing patterns of these current or potential buyers.
There are two main types of primary market research methods, which include:
Exploratory research: often the first step companies take when conducting market research, exploratory research focuses primarily on why customers buy certain products and the qualities they look for in the product or service they choose. It can also help you better understand what they may like about your product, what improvements you can make and the industry challenges you may face when selling your product.
Specific research: the second step when performing primary market research on your product is typically specific research, which you can use to evaluate feedback from your consumers at a more in-depth level. After identifying the challenges in your industry or improvements to make, you can segment a smaller group of consumers and ask them to detail the challenges your product may face and their suggestions to overcome them.
Your primary research is the best thing to inform changes to the product or service before you're ready to launch.
Businesses often use a majority of secondary research to perform competitive analysis. You can conduct this type of resource by gathering records, data and statistics that are available to you. Common sources people may use when conducting secondary research can include:
Internal sources: if your new product is similar to a product you sell, you can refer to your current business information like sales data, trend reports or market statistics. Review all of your financial documents such as retention rates, the performance of current and older accounts and revenues made for each sale.
Public sources: this is free, basic data you can gather about your market and industry. You can visit areas like the library or search online to find this public data from government agencies, universities, researchers and other companies in your field.
Commercial sources: commercial sources are typically privately funded market reports you can access from various research agencies. They may provide in-depth details about how consumers behave in your industry.
Benefits of market research
Performing market research for your business may involve a significant amount of time and money, but companies often consider it a worthy investment. By paying to access market research resources before developing or releasing a product, you can prevent making mistakes during production or promotion that might have a much more significant financial impact on the company. Besides preventing wasted resources, other advantages of conducting market research may include:
easily understanding what influences consumers' purchasing decisions
gaining an understanding of how successful your product can be around a specific group of people
having a newfound knowledge of where consumers are researching different products
explaining what consumers want and need from their products
allowing you to build an effective marketing strategy catered towards your target audience
informing you of how consumers interact with other brands and businesses
How to conduct market research
Here are six steps you can take to conduct market research that may guide your promotional strategies:
1. Determine your buyer personas
The first step in conducting market research is determining your buyer personas. Buyer personas are characters you create that represent your current customer base and potential consumers. They have the qualities of your target market and understanding how they might make purchasing decisions and what they want in a product or service can help you choose an approach to performing market research. When creating buyer personas, it's important to include as much detail as possible about who they are and how they spend their money. The character traits you might include are:
You can use a buyer persona throughout different business functions, including product development and marketing.
2. Choose people to research
Once you've determined who your buyer personas are, you can use these representations to find people who fit a majority of your buyer personas' characteristics. Ensure you include a wide variety of potential or current customers who can provide reliable input about your product. People you may choose for your market research include:
customers who have recently purchased one or more of your products
someone who has visited your store or sampled your product and chosen not to purchase it
consumers who have recently bought a competitor's product
followers on your social media pages who haven't purchased your product
Once you've decided who you'd like to research, you can reach out to them via social media or email. Explain that you're trying to gather important information about your company and need their feedback. Ask if they prefer taking part in a study, online poll or phone interview to better understand which method your participants prefer.
3. Write research questions to ask your participants
Next, consider the questions you want to ask your participants. Think about the information you want to gather and the details that can help you develop marketing strategies. Remember to ask open-ended questions instead of yes or no questions and encourage participants to make responses as long as they wish. The questions you may ask depend on your industry and the purpose of your research. For example, if you were conducting market research about a new cosmetic product you want to offer, you might ask questions like:
What is your age?
How much do you usually spend on cosmetics each month?
What are your favourite cosmetic products and why?
What's the most recent cosmetic purchase you made?
Where do you usually buy your cosmetics?
What are some traits of a quality cosmetic product?
Have you ever used cosmetic products from this company?
Do you have any feedback about our products?
It might also be a good idea to allow the people conducting these surveys to ask questions they don't have listed in response to interesting answers. This might prove to be valuable market research.
4. Conduct primary research on the people you've selected
After you've decided on questions to ask your participants, you can conduct primary market research. Many professionals choose to conduct polls or surveys using the questions they chose. You may ask for responses from your current customers, potential customers or both. Companies often conduct primary market research by email or on social media, as digital platforms make responding easy for the participant. You might also consider offering an incentive for completing the pool or survey, such as a promotional code or free product.
5. Perform your secondary market research
Once you've gathered responses from your primary research participants, the next step is to conduct secondary market research. Search for similar businesses in your industry and look for market reports that describe the products they offer, the success of the products, improvements they've made and positive feedback from customers. Learning what customers like and dislike about your competitors' products can guide you in developing your own promotional strategy.
6. Draw a conclusion based on your findings
Using information from both your primary and secondary market research, evaluate the data to look for patterns and trends. By comparing the two, you can find relationships between the products customers enjoy and how the companies' strategies affected their purchasing experience. You may find it helpful to create charts or graphs of your data, which you can present to sales and marketing teams to show them areas where the company excels, areas where it might use improvement and how you can use this information to develop, promote and sell successful products.
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